Finance Minister Muhammad Aurangzeb on Friday presented Pakistan’s federal budget for fiscal year 2026-27, projecting economic growth of 4.1 per cent and outlining measures aimed at sustaining macroeconomic stability, increasing revenue collection and advancing structural reforms.

Presenting what he described as the government’s third budget, Aurangzeb said Pakistan was entering a period in which the international community sought stronger ties with the country, while highlighting recent diplomatic and security achievements.

He termed the success of Operation Bunyan-um-Marsoos a “bright chapter” in the country’s history and said Pakistan’s defence capabilities had gained international recognition.

A strong defence, he added, remained essential for safeguarding national sovereignty and territorial integrity.

The finance minister said Pakistan had overcome significant economic challenges through sustained policy efforts. He noted that despite floods and the impact of the recent US-Iran conflict, the economy was expected to record growth of 3.7 per cent during the outgoing fiscal year.

Aurangzeb said growth in large-scale manufacturing and the services sector had reached their highest levels in four years, while per capita income had risen to $1,901.

He said foreign exchange reserves were sufficient to cover three months of imports and projected workers’ remittances to reach $41 billion by the end of the current fiscal year.

Remittances during the first 11 months stood at $38 billion, with 92 per cent received through formal banking channels.

The minister said the tax-to-GDP ratio had improved by nearly two percentage points and projected the fiscal deficit to decline to 4 per cent of GDP in the current fiscal year.

Inflation, which stood at 4.5 per cent in the previous fiscal year, was expected to remain around 7 per cent this year, below the official target of 7.5 per cent, he said.

Aurangzeb said Pakistan’s credit rating had stabilised and noted that the country had returned to international bond markets for the first time since 2022.

He also announced the issuance of Pakistan’s first Panda Bond, describing it as a significant step in deepening financial ties with China.

Highlighting investment trends, he said the Pakistan Stock Exchange had added 173,000 new investors, while 39,000 new companies were registered with the Securities and Exchange Commission of Pakistan (SECP).

On privatisation, the minister said the government had fulfilled its commitment to move ahead with divestment plans.

He said the process began with the First Women Bank and that the national airline had been transferred to the private sector for Rs185 billion. Notices had also been issued for the privatisation of three electricity distribution companies (DISCOs), with additional state-owned entities expected to follow under a five-year reform plan.

Aurangzeb said comprehensive reforms were underway at the Federal Board of Revenue (FBR), with encouraging early results. He projected FBR tax collection for the outgoing fiscal year at Rs13 trillion and said a production monitoring system was expected to generate an additional Rs61 billion in tax revenues. The system would be expanded in the coming months to support a more equitable tax regime, he added.

For fiscal year 2026-27, the government has set an FBR tax collection target of Rs15.264 trillion. The budget projects economic growth of 4.1 percent, inflation of 8.2 per cent and a fiscal deficit of 3.6 per cent of GDP.

The minister said the government remained committed to maintaining economic stability, broadening the tax base and implementing reforms aimed at supporting sustainable long-term growth.

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