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The Government of Pakistan has presented a budget of more than 18 lakh crore Pakistani rupees for the financial year 2026-27. After getting approval from the cabinet of Prime Minister Shehbaz Sharif, Finance Minister Muhammad Aurangzeb presented this budget proposal in the Parliament.
Tough economic decisions have been taken in this budget to meet the conditions of the International Monetary Fund (IMF) and to bring the country’s economy back on track. According to the documents, Pakistan’s biggest challenge is still debt. Out of the total budget of Rs 18.8 lakh crore, 8.05 lakh crore Pakistani rupees will be spent only in repaying the installments of the old loan and its interest.
Defense expenditure has been given special priority in the budget. The government has allocated approximately Rs 3 lakh crore Pakistani rupees for army and defense related expenses. Apart from this, Rs 1.7 lakh crore has been kept separately for the administrative expenses of defense services. The defense budget has been increased by 17.5 percent compared to last year.
A target of 4% (GDP) growth has been set in the new financial year, while the average inflation rate is estimated to be 8.2%. Salaries and pensions of government employees have been increased by 7%, and minimum wages are proposed to be increased by 10%. The 9% surcharge on the rich class has been removed.
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3 out of every 10 people in Pakistan are poor, expenditure on education decreased to 0.8% of GDP
Poverty is continuously increasing in Pakistan, while there has been a huge decline in government expenditure on education. According to the Pakistan Economic Survey 2025-26, the country’s poverty rate is set to increase from 21.9% in 2018-19 to 28.9% in 2024-25.
The report said that due to inflation, income inequality and economic pressures, millions of people have again fallen below the poverty line. Rising prices have affected the purchasing power of people, making it difficult for families to meet everyday expenses.
According to the survey, poverty has increased in rural areas as well as urban areas. The report also said that as poverty has increased, income inequality has also increased.
At the same time, concern has also been expressed regarding the education sector. Government expenditure on education reduced by 23% to Rs 962 billion in fiscal year 2025. The share of expenditure on education in Gross Domestic Product (GDP) declined to only 0.8%.
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