Finance Minister underscores importance of tariff reforms to boost exports
ISLAMABAD: Federal Minister for Finance and Revenue, Muhammad Aurangzeb, addressed the concerns of various stakeholders on Wednesday in a post-budget press conference, following the presentation of the federal budget for the fiscal year 2025-26 in the National Assembly.
Highlighting key aspects of the budget, Aurangzeb stressed the significance of the proposed tariff reforms, describing them as “very significant” for enhancing Pakistan’s export potential. He announced that the government plans to eliminate additional customs duties on 4,000 out of 7,000 tariff lines, in a bid to make local industries more competitive internationally.
Relief Measures and Fiscal Constraints
Aurangzeb acknowledged the expectations of the salaried class, stating that while the government aims to provide maximum relief, such measures must align with available fiscal space. “We want to support the salaried class, but the reality is that we can only offer as much relief as our fiscal constraints allow,” he said.
He noted that Pakistan’s tax-to-GDP ratio currently stands at 10.3%, with plans to increase it to 10.9% in FY26. He emphasized the need for legislative reforms to curb leakages and reduce reliance on supplementary fiscal measures. “We need enabling amendments and legislation to plug leakages in the system,” he added.
Expenditure and Sectoral Support
The finance minister stated that government expenditures have increased by 1.9% this year. Finance Secretary Imdadullah Bosal clarified that the increase is strictly limited to essential areas.
Aurangzeb also assured stakeholders that no new taxes have been levied on the agriculture sector. Instead, the government will extend soft-term loans to small farmers to support rural productivity.
Clarification on Electricity Surcharge
Addressing speculation around a potential 10% surcharge on electricity bills, Federal Board of Revenue (FBR) Chairman Rashid Mehmood Langrial clarified that no such surcharge has been imposed.
NFC Award and Intergovernmental Coordination
Responding to questions regarding the potential delinking of population figures from the National Finance Commission (NFC) award, Aurangzeb assured that any changes would be made in full consultation with provincial governments.
Budget Overview
The federal budget for FY2025-26, presented by Aurangzeb in parliament on Tuesday, has a total outlay of Rs17.573 trillion. It sets an ambitious GDP growth target of 4.2%, compared to 2.7% in the outgoing fiscal year.
The government has also set an inflation target of 7.5% for the upcoming fiscal year. The fiscal deficit is projected at 3.9% of GDP (Rs5,037 billion), down from the current year’s 5.9%. The primary surplus target is set at 2.4% of GDP, an improvement from the revised 2.2% in the current fiscal year.
Aurangzeb described the budget as the beginning of a broader strategy aimed at transforming Pakistan into a competitive and export-driven economy, stating it will “reshape the DNA of the economy.”
Press Conference Boycott
Notably, the press conference was marred by a walkout by journalists, who protested the government’s failure to hold a previously scheduled technical briefing on the Finance Bill.
