ISLAMABAD – Pakistan’s Federal Budget 2026-27 is finally being presented in National Assembly on Friday after a two-hour delay, amid high political tensions, coalition negotiations and a dramatic protest by PPP lawmakers over Sindh’s water share.
Bilawal Bhutto Zardari attended the budget session despite earlier reports suggesting he would stay away. His appearance came after a series of high-level meetings between PPP and PML-N leaders aimed at resolving differences over budget-related matters and broader political issues.
Before the budget speech, PPP members staged a protest inside the National Assembly, accusing the federal government of denying Sindh its fair share of water. Led by Shazia Marri, lawmakers raised slogans and displayed placards highlighting what they described as a severe water crisis in the province. Marri later warned that the PPP would not allow its political mandate to be undermined and demanded greater political space within the ruling coalition.
Meanwhile, the federal cabinet approved the budget at Parliament House, while Prime Minister Shehbaz Sharif held talks with coalition partner MQM-P, praising its role in maintaining economic stability and supporting public welfare initiatives.
The government is expected to introduce new tax measures worth Rs660 billion to Rs700 billion as it seeks to strengthen revenues and meet fiscal targets.
At the same time, relief is likely for selected salaried individuals, particularly those earning between Rs230,000 and Rs341,000 per month, while many taxpayers in lower income brackets may see little or no change in their tax burden.
Finance Minister Muhammad Aurangzeb has also hinted at major incentives for the agriculture and housing sectors, including plans to facilitate long-term financing at single-digit interest rates. A new digital, contact-free tax system and revised taxation model for retailers are also expected to be introduced.
The government is further looking to widen the tax net through measures targeting traders and small businesses, while exploring changes to remittance regulations to address concerns raised by overseas Pakistanis.
After weeks of negotiations, the PML-N-led government and PPP reportedly agreed to create additional fiscal space by curbing development and administrative spending across the federation.
The National Economic Council (NEC) approved a combined federal and provincial development budget of Rs3.218 trillion for FY2026-27, significantly lower than earlier proposals. Punjab suffered the largest reduction, with nearly half of its proposed development allocation slashed, while Balochistan’s development budget remained intact.
The budget comes at a critical moment for Pakistan’s economy, balancing new taxation measures, targeted relief packages, coalition politics and strategic spending priorities, all while facing pressure to sustain economic stability and deliver relief to citizens.
