Pakistan unveils $53.93 billion federal budget, sets 4.8% GDP growth target

A shopkeeper fixes the price tag of rice at his shop in a market in Karachi on June 10, 2021. (AFP)
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Updated 02 August 2021
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Pakistan unveils $53.93 billion federal budget, sets 4.8% GDP growth target

  • Public Sector Development Program increased to Rs900 billion from Rs630 billion, Rs1.37 trillion to be spent on defence
  • Finance minister rules out imposition of new taxes, announces increased subsidies allocation to Rs682 billion

KARACHI: Amid desk thumping and sloganeering from opposition politicians in the national assembly, Pakistani finance minister Shaukat Tarin on Friday presented a deficit budget with a total outlay of Rs8.4 trillion ($53.93 billion), a revenue generation target of Rs5.829 trillion and a growth target at 4.8% of GDP.

The Pakistan Tehreek-e-Insaf (PTI) government presented its third budget at a time when the country is facing multiple challenges including an economic downturn propelled by the coronavirus pandemic. The main objective of the budget, officials have said, is to strike a balance between fiscal deficits due to COVID-19 and boosting economic growth. 

The budget also comes while Pakistan is in talks with the IMF as part of the sixth review of a $6 billion bailout programme, which it entered in 2019. The revenue target has been a key topic in negotiations, and Tarin has said the IMF and Pakistani government have debated ways to achieve the target, which is 23% higher than the current year’s expected collection.

“Prime Minister Imran Khan's government did not hesitate to take many difficult decisions,” Tarin, the fourth finance minister in the Khan-led government, said as he addressed the budget session in parliament. “The government, through its sound economic policies, has turned the current account deficit into a surplus in FY20.”

He announced a $1.1 billion allocation to procure coronavirus vaccines, saying the government planned to vaccinate 100 million people by July 2022 and had also set aside Rs100 billion to combat coronavirus spread in the next fiscal year.  




Pakistan's finance minister Shaukat Tarin presents federal budget for fiscal year 2021-22 at the National Assembly in Islamabad, Pakistan, on June 11, 2021. (Photo courtesy: Finance Ministry)

The finance minister announced an increase in the Public Sector Development Program for next fiscal year to Rs900 billion from Rs630 billion, while Rs1.37 trillion would be spent on defence.

Tarin reiterated that the economy was moving from a stabilization phase “on its way to growth”: “18% increase in tax collection has come on the back of Pakistan's economic recovery.”

He also proposed a number of pro-people measures, including a reduction in taxes and an increase in the salaries of federal government employees and pensions by 10% in light of inflationary pressures. 
 
He ruled out the imposition of new taxes on the salaried class, saying the government would introduce reforms in the taxation system that would make it easier to file returns. 

The finance minister also announced that the federal government had increased subsidies allocation to Rs682 billion and slashed sales tax on locally manufactured cars from 17% to 12.5%. The government has also exempted Federal Excise Duty (FED) on 850cc cars.  

The federal government also announced cutting withholding taxes on mobile phones which would be done in a phased manner: 10% in the first phase and then 8% later on.  

To lift the poor out of poverty, “the government had decided to provide interest-free loans of up to Rs500,000 to the poor,” Tarin said.


‘Look ahead or look up?’: Pakistan’s police face new challenge as militants take to drone warfare

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‘Look ahead or look up?’: Pakistan’s police face new challenge as militants take to drone warfare

  • Officials say militants are using weapons and equipment left behind after allied forces withdrew from Afghanistan
  • Police in northwest Pakistan say electronic jammers have helped repel more than 300 drone attacks since mid-2025

BANNU, Pakistan: On a quiet morning last July, Constable Hazrat Ali had just finished his prayers at the Miryan police station in Pakistan’s volatile northwest when the shouting began.

His colleagues in Bannu district spotted a small speck in the sky. Before Ali could take cover, an explosion tore through the compound behind him. It was not a mortar or a suicide vest, but an improvised explosive dropped from a drone.

“Now should we look ahead or look up [to sky]?” said Ali, who was wounded again in a second drone strike during an operation against militants last month. He still carries shrapnel scars on his back, hand and foot, physical reminders of how the battlefield has shifted upward.

For police in the northwestern Khyber Pakhtunkhwa (KP) province, the fight against militancy has become a three-dimensional conflict. Pakistani officials say armed groups, including the Tehreek-e-Taliban Pakistan (TTP), are increasingly deploying commercial drones modified to drop explosives, alongside other weapons they say were acquired after the US military withdrawal from neighboring Afghanistan.

Security analysts say the trend mirrors a wider global pattern, where low-cost, commercially available drones are being repurposed by non-state actors from the Middle East to Eastern Europe, challenging traditional policing and counterinsurgency tactics.

The escalation comes as militant violence has surged across Pakistan. Islamabad-based Pakistan Institute for Conflict and Security Studies (PICSS) reported a 73 percent rise in combat-related deaths in 2025, with fatalities climbing to 3,387 from 1,950 a year earlier. Militants have increasingly shifted operations from northern tribal belts to southern KP districts such as Bannu, Lakki Marwat and Dera Ismail Khan.

“Bannu is an important town of southern KP, and we are feeling the heat,” said Sajjad Khan, the region’s police chief. “There has been an enormous increase in the number of incidents of terrorism… It is a mix of local militants and Afghan militants.”

In 2025 alone, Bannu police recorded 134 attacks on stations, checkpoints and personnel. At least 27 police officers were killed, while authorities say 53 militants died in the clashes. Many assaults involved coordinated, multi-pronged attacks using heavy weapons.

Drones have also added a new layer of danger. What began as reconnaissance tools have been weaponized with improvised devices that rely on gravity rather than guidance systems.

“Earlier, they used to drop [explosives] in bottles. After that, they started cutting pipes for this purpose,” said Jamshed Khan, head of the regional bomb disposal unit. “Now we have encountered a new type: a pistol hand grenade.”

When dropped from above, he explained, a metal pin ignites the charge on impact.

Deputy Superintendent of Police Raza Khan, who narrowly survived a drone strike during construction at a checkpoint, described devices packed with nails, bullets and metal fragments.

“They attach a shuttlecock-like piece on top. When they drop it from a height, its direction remains straight toward the ground,” he said.

TARGETING CIVILIANS

Officials say militants’ rapid adoption of drone technology has been fueled by access to equipment on informal markets, while police procurement remains slower.

“It is easy for militants to get such things,” Sajjad Khan said. “And for us, I mean, we have to go through certain process and procedures as per rules.”

That imbalance began to shift in mid-2025, when authorities deployed electronic anti-drone systems in the region. Before that, officers relied on snipers or improvised nets strung over police compounds.

“Initially, when we did not have that anti-drone system, their strikes were effective,” the police chief said, adding that more than 300 attempted drone attacks have since been repelled or electronically disrupted. “That was a decisive moment.”

Police say militants have also targeted civilians, killing nine people in drone attacks this year, often in communities accused of cooperating with authorities. Several police stations suffered structural damage.

Bannu’s location as a gateway between Pakistan and Afghanistan has made it a security flashpoint since colonial times. But officials say the aerial dimension of the conflict has placed unprecedented strain on local forces.

For constables like Hazrat Ali, new technology offers some protection, but resolve remains central.

“Nowadays, they have ammunition and all kinds of the most modern weapons. They also have large drones,” he said. “When we fight them, we fight with our courage and determination.”