The federal government has prepared a set of proposals for the upcoming fiscal year 2026-27 budget, which include potential increases in salaries and pensions for government employees, sources said.

The budgetary proposals also included merging certain ad hoc allowances into basic pay and a possible rise in the minimum wage, the sources added.

President Asif Ali Zardari has summoned budget sessions of the National Assembly and Senate on June 5, during which the federal budget for the next fiscal year is expected to be presented and debated.

According to the sources, the budget sessions were initially proposed to be held on June 1.

However, the schedule was revised as a large number of lawmakers had gone to Saudi Arabia to perform Hajj.

Over 60 members of parliament have travelled to Saudi Arabia for pilgrimage this year, with their return expected in the first week of June.

The sources said that three major proposals have been drafted to provide relief to government employees and pensioners, which will be presented to the federal cabinet before the budget is formally submitted.

The proposals under consideration include a 5 to 10 per cent increase in salaries and pensions.

Additionally, some of the four existing ad hoc allowances may be merged into basic pay, as currently, these allowances are paid separately.

A “disparity allowance” has also been proposed for employees from grade 1 to grade 16 to provide some relief against inflation, particularly for lower- and middle-level government staff.

The government is also considering an increase in the minimum wage, although the final rate has yet to be determined.

For pensions, the proposals suggest using the average inflation rate of the past two years as a basis for increases, aimed at shielding retired employees from the rising cost of living.

The sources added that the government has requested the IMF to allow a 5 to 10 per cent reduction in the tax burden on salaried classes.

These proposals are expected to be presented to the federal cabinet in the coming days, after which they will be tabled in the National Assembly and Senate for discussion and approval.