Pakistan Budget for FY 2026-27

PES FY2026: GDP growth higher than last year but falls short of 4.2pc target​

News Desk
June 11, 2026

The government unveiled the Pakistan Economic Survey (PES) for FY2025-26 on Thursday, according to which GDP growth was recorded at 3.7pc in the outgoing fiscal year.

This is higher than last year’s growth of 3.18pc but falls short of its target of 4.2pc.

Addressing a press conference in Islamabad, Finance Minister Muhammad Aurangzeb presented the survey, which he said told a story of resilience and discipline shown during the previous year.

He said the country began the outgoing fiscal year with uncertainty due to tariffs. “Then, by the end of July, we reached a point where we could be in a competitive position with respect to our exports, especially to the US,” he added.
 

GDP growth​

He said GDP growth in FY26 was recorded at 3.7 per cent, against a target of 4.2pc.

However, the economic survey stated that the economy “accelerated its growth momentum in FY2026” compared to the previous year, when GDP growth was recorded at 3.18pc.

“The improvement owes to effective macroeconomic management, better fiscal account, growth in large scale manufacturing (LSM) sector, resilience of the agriculture sector to floods of 2025, exchange rate stability and reforms under the IMF Extended Fund Facility (EFF) Programme,” it stated.

For his part, Aurangzeb also pointed out that global growth had reduced to 3.1pc from 3.7pc due to the factors he elaborated on earlier in the press conference.

The finance minister said that Pakistan had recorded GDP growth of 3.7pc, which was the highest in the past four years. The finance minister recalled that GDP growth in FY2023 was -0.2pc, 2.6pc in FY2024 and 3.2pc in FY2025.

He said it was earlier estimated that GDP growth would exceed 4pc, but it did not happen due to the ongoing conflict in the Middle East.

“But having said that, we have still reached a historically high size of the economy at Rs126.9 trillion,” he said.

The minister said GDP per capita income had reached $1,901, which was $1,751.
 
The economic survey stated that the economy “accelerated its growth momentum in FY2026” compared to the previous year, when GDP growth was recorded at 3.18pc.

“The improvement owes to effective macroeconomic management, better fiscal account, growth in large scale manufacturing (LSM) sector, resilience of the agriculture sector to floods of 2025, exchange rate stability and reforms under the IMF Extended Fund Facility (EFF) Programme,” it stated.

For his part, Aurangzeb also pointed out that global growth had reduced to 3.1pc from 3.7pc due to the factors he elaborated on earlier in the press conference.

The finance minister said that Pakistan had recorded GDP growth of 3.7pc, which was the highest in the past four years. The finance minister recalled that GDP growth in FY2023 was -0.2pc, 2.6pc in FY2024 and 3.2pc in FY2025.

He said it was earlier estimated that GDP growth would exceed 4pc, but it did not happen due to the ongoing conflict in the Middle East.

“But having said that, we have still reached a historically high size of the economy at Rs126.9 trillion,” he said.

The minister said GDP per capita income had reached $1,901, which was $1,751.
 

Agriculture​

Giving a sector-wise breakdown, he said growth in agriculture was recorded at 2.89pc, compared to 1.53pc in the last fiscal year. “This was despite floods,” he said, adding that the crop sub-sector showed positive growth. After contraction, it was recorded at 1.44pc, the finance minister said.

He added the livestock sector also “continues to go from strength to strength”.
 

LSM​

Aurangzeb said 6.1pc growth was recorded in large-scale manufacturing (LSM) in FY26, which was the highest in the last four years. He elaborated that positive growth was seen in 16 of LSM’s 22 sub-sectors.

“So it’s not one single sector that is leading or contributing to this 6.1pc turnaround in LSM. It is broadband [growth],” he said.

He further said that prominent year-on-year growth was witnessed in this sector. “To give you some examples, there was a 10pc increase in the demand for cement, 17pc for fertiliser, 5pc for petroleum, 31pc for automobiles and 9pc for mobile phones.”

Noting that the services sector made up close to 58pc of Pakistan’s GDP, he said 4.9pc growth was recorded in this sector in the outgoing fiscal year.

“This, too, is the highest in the last four years,” he said.

He particularly mentioned communication and information services, which he said recorded a growth of 7.52pc. The growth in this sub-sector in FY26 was also the highest over the past four years.

Moreover, he continued, this sub-sector held significance for the digital economy.
 

Fiscal deficit​

The survey document stated that the fiscal deficit “narrowed significantly” to 0.7pc of GDP (Rs 856.4bn) from 2.6pc of GDP (Rs 2,970bn) in the corresponding period last year.

Similarly, primary surplus also improved to 3.2pc from 3pc, the survey document said.

Aurangzeb said during his press conference that tax revenues had increased by 10.1pc and markup payments saw a decrease of 23pc, which he said increased fiscal space.
 

BUDGET 2026-27: ​

NEC trims uplift plans; Punjab takes biggest hit​

Khaleeq Kiani
June 11, 2026

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Prime Minister Shehbaz Sharif chairs a meeting of the National Economic Council (NEC) in Islamabad on June 10, 2026. — PID


• Overall development outlay slashed by 25pc to Rs3.218tr
• Federal PSDP reduced to Rs1tr, provincial ADPs to Rs2.218tr
• No new projects except for interior, defence ministries
• PM says strengthening defence is country’s biggest challenge
• Ahsan says Pakistan lagged behind region due to weak investment in education, skills

ISLAMABAD: Freezing provincial development plans at their actual utilisation this year, the National Economic Council (NEC) on Wednesday cut the federal and provincial development budget by one-fourth to Rs3.218 trillion for the next fiscal year from Rs4.264tr cleared by the Annual Plan Coordination Committee (APCC) last week.

Of the Rs1.046tr total cut, the combined annual development plans (ADPs) of the four provinces were slashed by almost one-third (29.3pc) to Rs2.218tr — roughly their actual utilisation so far in the current fiscal year — compared to the Rs3.138tr provincial portfolio finalised by the APCC on June 1.

Punjab’s development plan was chopped by almost half, or 49pc, the biggest cut among all stakeholders, while Balochistan remained unaffected and actually secured more.

The development freeze was agreed upon by the major coalition partners — the PPP and PML-N — before the NEC and budget dates were finalised.

To provide political face-saving to provincial governments, the federal government also agreed to bring down its Public Sector Development Programme (PSDP) by Rs126bn, or 11pc, to Rs1tr from Rs1.126tr recommended by the APCC, Planning Minister Ahsan Iqbal told reporters after the NEC meeting.
 
The meeting was presided over by Prime Minister Shehbaz Sharif and attended by three provincial chief ministers. Punjab Chief Minister Maryam Nawaz could not attend because of her recent surgery.

The minister said provincial governments had argued that it would be difficult for them to defend ADP cuts if the Centre’s PSDP remained intact.

Mr Iqbal said the Punjab chief minister had authorised the downward revision that restricted Punjab’s ADP for next year to Rs749bn from Rs1.455tr cleared by the APCC only a week ago.

Coalition partner PPP was able to minimise the dent to Sindh’s ADP, which was contained at Rs706bn for next year — down 13.5pc, or Rs110bn — from last week’s Rs816bn, which was already lower than the current year’s revised ADP of Rs845bn.

Khyber Pakhtunkhwa Chief Minister Sohail Afridi agreed to a revised ADP of Rs455bn — exactly the same as budgeted this year — instead of Rs564bn cleared by the APCC.

Balochistan was the only province to retain its Rs308bn development programme for next year, almost Rs29bn higher than the amount budgeted for the current fiscal year.

The separate development plans of federal state-owned entities remained unchanged at Rs451bn, putting the consolidated national development outlay at Rs3.669tr, down 22.2pc, or Rs1.046tr, from Rs4.715tr announced after the APCC meeting last week.

The APCC is a forum of federal and provincial planning ministers that finalises development recommendations for the NEC’s approval.

Informed sources said that with reappropriation of the development portfolio, around Rs800bn to Rs900bn could be repurposed for strategic needs such as water resources and national security.
 
Strengthening defence

Meanwhile, in a televised statement, Prime Minister Shehbaz Sharif said the “biggest challenge” the country faced was “to strengthen our defence”, particularly against terrorism.

“The entire nation, especially KP and Balochistan, as well as the law enforcement agencies and armed forces, is making sacrifices in the fight against terrorism,” he said, adding that terrorism could only be eliminated if the country “put up a collective struggle against it”.


The prime minister said the Centre and provinces had taken many decisions in the best interest of Pakistan, as consultations with the provinces on all matters were conducted with seriousness to see where more resources could be generated.

PM Shehbaz said he had held a telephonic conversation with IMF Managing Director Kristalina Georgieva, who was extremely appreciative of Pakistan’s sincere efforts towards the IMF programme.
 
‘Development deficit’

Mr Iqbal said the NEC agreed that the time had come for the entire nation and all stakeholders to sit together and work for export growth to $100bn in a few years, as well as import substitution, like the country had worked for its nuclear mission.

The huddle agreed to his suggestion for quarterly NEC meetings to review and make adjustments by reviving the council’s original mandate of coordinating financial, social and economic policies, as required under Article 156 of the Constitution, to overcome the “development deficit”.

He said the NEC had turned over the years into a forum that merely stamped the development budget, although it was required under the Constitution to review the overall economic condition and advise both the Centre and the provinces in formulating plans “in respect of financial, commercial, social and economic policies” to ensure balanced development and regional equity.

As a consequence, Pakistan had lagged behind regional competitors, he said.
 
Despite downward reductions in the development portfolio by almost a quarter, the minister said next year’s GDP growth target would stay at 4pc, to be aided by 3.6pc growth in agriculture, 4.5pc in industry and 4.2pc in services. Inflation, measured by the Consumer Price Index, was estimated at 8.2pc.

The Rs1tr federal PSDP will also contain foreign assistance equivalent to Rs255bn, while the provincial Rs2.218tr portfolio will include Rs583bn in foreign aid, taking total foreign funding to Rs838bn — or 26pc of the total Rs3.218tr development outlay.

Giving a break-up, the minister said the PSDP contained Rs602.5bn for infrastructure, including Rs116bn for energy, Rs76bn for water, Rs356bn for transport and communication and Rs55bn for physical planning and housing.

Another Rs181bn has been earmarked for the social sector, including Rs74bn for education and higher education, Rs22bn for health, Rs63bn for MNA schemes and Rs21bn for other social sectors. Likewise, Rs63bn has been allocated for coalition partners’ schemes.

In addition, Rs89bn has been set aside for special areas, including AJK and GB, Rs56bn for the merged districts of KP, Rs41bn for science and technology and Rs13bn for governance.

Another Rs12.6bn would be used for production sectors, including Rs4.6bn for food and agriculture and Rs8bn for industries, while the remaining Rs5bn has been allocated for miscellaneous areas.
 
GDP: $452B
Population: 252 mil

GDP per capita: $1794

What is $1901? GNI per capita?

www.thenews.pk

Pakistan economy shows resilience despite challenges: FinMin

Finance Minister Muhammad Aurangzeb on Thursday said Pakistan's economy demonstrated resilience and delivered improved performance despite domestic and global challenges, including uncertainty...
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Last edited:
hydrabadi_arab said:
This happened. Now punjab dev budget is same as Sindh despite 2.3x more population. N league once again sold punjab to rule some more years.
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I think it’s smart, the “development” budget wasn’t going anywhere anyway, so to curb down nationalists tensions it’s better to spend more on balochistan and KPK
 
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