ISLAMABAD: Pakistan’s federal budget for fiscal year 2026–27 is broadly “positive” and offers relief to key sectors of the economy, a brokerage report said, while warning that revenue mobilization will remain challenging under International Monetary Fund benchmarks.
Pakistan unveiled a Rs18.77 trillion ($67.49 billion) federal budget on Friday, boosting defense spending and setting ambitious revenue targets as it seeks to sustain its IMF-backed economic recovery amid fiscal pressures and regional tensions. The government has set targets of four percent economic growth and 8.2 percent inflation for the fiscal year starting in July.
In a report published on Saturday, Topline Securities said the budget seeks to support growth and ease pressure on households while preserving fiscal and external discipline.
“We believe this budget is positive for market due to measures like reduction in super tax, continuation of exemption on IT sector, support to exporters and refineries, and positive real estate measures like reduction in duties and housing subsidy,” it said.
The report added that the government would likely introduce additional tax measures or policy steps to meet the IMF target of collecting Rs15.3 trillion ($55 billion) in fiscal year 2026-27.
Topline said relief measures included lower tax rates for middle-income salaried individuals, removal of surcharge on incomes above Rs10 million ($35,971), a cut in super tax, relief for exporters, incentives for real estate, and an extension of reduced GST on electric vehicles (EVs).
It said the government had used available fiscal space to grant tax relief to salaried individuals and businesses by lowering tax slabs and abolishing the super tax.
The report highlighted that measures aimed at boosting tax collection relied largely on administrative reforms and higher taxes on retailers, warning that any revenue shortfall could force the government to roll back relief measures or cut development spending.
Topline said it expects GDP growth of 3–3.5 percent and inflation of 8-8.5 percent, while the government has set a four percent growth target and 8.2 percent inflation for FY27. The IMF, meanwhile, expects Pakistan’s GDP to grow 3.5 percent and inflation to average 8.4 percent.
Topline said it maintained its Pakistan Stock Exchange target of 203,000 for December this year, warning that continued US-Iran tensions and rising oil prices remained key risks to the index outlook.
According to the government, Pakistan’s economy grew an estimated 3.7 percent in the outgoing fiscal year, while inflation fell sharply from multi-decade highs during the recent economic crisis.
