KHADIJA HASAN
The 2027 Budget for Pakistan has been announced at a critical time. Despite last year’s period of global political and economic instability, the country has undergone a phase of stabilization. The fiscal deficit reduced from 2.6% last year to 0.7% during Jul-Mar FY2026. Real GDP growth remained stable at 3.7%, compared to 2.68% the year before, and during the first nine months of FY2026, public debt growth remaineds table at 3.4%. However, geopolitical tensions in the Middle East pushed up energy and transportation costs, causing the inflation rate to plummet to 11.7%. Despite these challenges, the 2027 Budget provides a fresh economic outlook for Pakistan.
In accordance with the International Monetary Fund’s Extended Fund Facility Program, the budget focuses on some of the country’s pressing structural challenges: broadening the tax base, continuing im-port tariff reforms, ands Sustaining incentives for the information technology sector. It has established strong targets, including a GDP growth rate of 4% and a revenue target of Rs. 18,186 billion.
At the same time, it offers employee relief measures, including a 7% increase in government pensions and sal-aries, income tax relief across four tax slabs, and the elimination of a sur-charge on salaried individuals.
However, Pakistan also continues facing challenges that compromise the socioeconomic development of its youth, comprising 2/3 of the population. Nearly 26.2 million children remain out of school, gender inequalities persist across every vital. sector of the economy, and 70 million people are living below the poverty line.
Moreover, certain emerging issues became the focus of discussion this year: According to the Population Projections Report 2023-2050, Pakistan’s population is predicted to reach 289 million in 2050 under the business-as-usual scenario.
Furthermore, al-though not an immediate threat to Pakistan, the West African Ebola epidemic, after being declared a Public Health Emergency of Inter-national Concern, has alerted health agencies to invest promptly in pandemic preparedness and healthcare management services.
All these crises raise an important question: are we equitably investing in the social sectors that are key to systemic strengthening, inclusive growth, decent living standards and human capital development?
Similar to patterns observed in previous budgetary cycles, the Budget has focused heavily on the 4 Ds, which together ac-count for Rs. 17,495 bil-lion: Debt Repayment, Defense Affairs and Services, Day-to-Day Government Running Expenditures, and Development through grants, transfers, and subsidies.
Of these four, the first three are non-discretionary expenditures and cannot be compromised without affecting core governance oper-ations, macroeconomic stability and national security.
Consequently, the fourth D, along with the fifth D-Development and Lending (Rs. 1,276 billion) ends up receiving residual attention in government al locations. This amount forms part of a broader national development outlay that includes provincial development budgets and lays the foundation for social sector investment.
Consequently, the social sector often bears the brunt of receiving meagre fiscal allocations and this year, the budget has painted a mixed pic-ture, highlighting both strides and persistent shortcomings.
In the health sector, referring to initial allo cations, total spending has observed a notable increase compared to last year (Rs. 53.3 billion compared to Rs. 46.3 bil-lion). Key projects focus on the promotion of cardiovascular research and disease prevention: some include the expansion of the Armed Forces Institute of Cardiology (Rs. 1 billion) and a project at the National Institute of Heart Diseases (NIHD).
This inclination to wards infrastructural projects has led to a neglect of core national responsibilities, such as the One Health Work-force Development Program, which has received merely Rs. 99.9 million, and the Common Management Unit for TB, HIV/AIDS and malaria (Rs. 500 million). In addition, 70% of the healthcare resources are utilized for tertiary care instead of primary and preventive care.
These spending practices raise serious questions about policy priorities in reforms such as eradicating en demicinfectious diseases, including Hepatitis C, Polioor the sporadic HIV outbreaks, and strengthening child and maternal nutrition interventions.
The education sector has seen a staggering improvement in allocations, particularly aimed at digital trans-formation, technical and vocational training, and infrastructural revamping. The development allocations for the Higher Education Com-mission have increased from Rs. 34.9 to Rs. 46 billion, to support projects such as Al-related advancements and the Pakistan Education and Research Network.
However, current allocations remain unchanged, and this is noteworthy considering the increasing number of youth enrolments and the competitive academic market. The successful Daanish School Project has been allocated Rs. 22 billion, and the Youth Skills Development Program has received a handsome amount of Rs. 7.9 billion, compared to Rs. 4.3 bil-lion last year.
In social protection, following heated political debates, the Benazir Income Support Pro-gram has managed to secure a 17% increase in budget allocations, maintaining nationwide equity and financial protection for the most marginalized communities.
This year’s budget has also advanced the gender-budget tagging framework, with one of the main achievements being the abolishment of 18% sales tax on sanitary pads and contraceptives.
Thanks to intense social media advocacy and support of human rights organizations and legal experts, this not only guarantees improved. accessibility and health. outcomes for women and girls but also active participation in education and the workforce.
Although this year’s budget has seen some positive developments in health, education and. social protection, implementation gaps, fiscal pressures, and fluctuating global priorities continue to hinder future progress in the social sector, and investments continue lagging behind. international bench-marks.
To truly align our future goals with the SDGs, as well as national frameworks such as the URAAN Pakistan, the policy outline needs to be thoroughly analyzed. to ensure that the social sector is not overlooked under fiscal constraints but rather seen as a long-term investment for economic progress, irrespective of global policy trends. Only by placing the vulnerable groups of society at the heart of our development agenda can Paki-stan move towards sustainable prosperity.
