The budget has been adopted. The applause has faded. Once again, Pakistan resumes his troubled journey through financial difficulties this time with a roadmap that feels more serious than in previous years.
The federal budget for FY2025–26 with an outlay of RS17.57 trillion is not a budget for promises, but of priorities. It marks a rare moment of fiscal restraint in a system that is long used to populist over -consumption. What it offers is not a breakthrough, but a chance: a recognition of boundaries and an opportunity to reform within them. However, this chance will be rejected unless bold action follows the virus words.
Several corrective steps have been introduced: Import tariffs reinstated, tax cuts rationalized and digital trade brought into the tax network. The increase in the tax -free income limit from RS600,000 to RS1.2 million provides some relief for employees struggling with persistent inflation. But these only open movements. The real challenge lies in the implementation.
Pakistan’s fragile administrative machines, political volatility and coalition -driven governance complicates the execution. Budget discipline is easy to declare, much harder to deliver. After years of stagflation and recurring crises, the public’s tolerance for victims without results is thin.
An encouraging development still stands out: political restraint. Bilawal Bhutto Zardari chose politics rather than populism. His support for progressive taxation and institutional reform rather than political obstacle signalizes a matured approach to governance.
This shift means deeply. Fiscal reform cannot succeed without political ownership. Bilawal’s constructive attitude can represent a generational spivot, from noise to shade. Pakistan needs such leadership because the margin of error is gone.
The country remains depending on external life support. The recent $ 3.7 billion loans from China offers breathing space but not stability. The IMF is not here to finance growth, but to stop the bleeding. Only domestic politics can pave the way to improvement.
The difference between good and poor debt is simple: Good debt builds capacity, poor debt delays collapse. This year, Pakistan will use RS5.7 trillion on interest payments, five times its federal development budget. It is not a sustainable course.
Consider Egypt. During the IMF pressure, it devalued its currency and cut subsidies. These were painful decisions that ultimately unlocked long -term investments. Pakistan has postponed such choices far too long.
Worse is that the debt burden can still elaborate. The IMF has warned that global debt levels are worse than they appear due to hidden obligations and off-the books obligations. For Pakistan, with his narrow tax base and import -heavy economy, the father is urgent.
Budget projects RS14.13 trillion in federal revenue, of which RS8.2 trillion goes to the provinces below the NFC price. Defense, debt service and subsidies consume most of the rest. It leaves little room for discretionary or development.
Yet within these restrictions, some reforms deserve recognition. Taxation of digital trade is due. Online platforms, payment gateways and curing services are now under tax network. A 5% collection on foreign digital services adapts Pakistan with global trends from France to India. But efficiency is related to enforcement. Does FBR have capacity and obligation to regulate this growing sector? Or will bad implementation once again undermine the promising policy?
Other countries offer lessons. In Indonesia, tax transfers to local authorities are increasingly linked to performance metrics. Pakistan had to introduce a similar model. For his credit, the budget also introduces several structural nudges: tax credits for low -income housing, tighter restrictions on cash transactions and greater control of property income.
This is step in the right direction but modest. What Pakistan really needs is not step -by -step adjustments, but deep structural reform. It includes adjusting energy prices with actual costs, restructuring loss -making state -owned companies, revision of FBR and increasing exports through real trade liberalization. Most critically, Pakistan must ensure that judicial predictability and contract enforcement to attract sustained investment.
Greece offers a relevant parallel. Against a paralyzing debt crisis, the painful reforms, including pension structure and liberalization of the labor market under intense domestic resistance and international control, implemented. Today, it reaps the benefits. Pakistan’s problems are no less and the urgent of the reform is just as great.
This year’s budget does something rarely: It admits reality. It sets boundaries, avoids theater and recognizes the extent of the crisis. It’s a start.
But now comes the hard part. To ensure its IMF program, Pakistan must deliver promised reforms, especially in the energy sector. Tax evasion must be limited through administrative audit. Over-dependence of short-term borrowing must end. Coordination between the center and provinces needs to be improved. The most important thing is that political stability must replace constant churn.
This budget will not transform Pakistan, but it recognizes that transformation begins with honesty. In Bilawal Bhutto Zardari’s measured commitment, a new kind of political maturity gleams. If this pragmatism takes root over the political spectrum, Pakistan may still replace his crisis bikes with a path to gradual reform.
Currently, the fiscal path remains narrow and the terrain is uncertain. But in a country that has too often chosen the illusion of discipline, even this modest realism is a form of progress.
The author is the senior lecturer in funding, leading international and transnational education at Birmingham City University’s College of Accountancy, Finance and Economics. He tweets/posts @hafizusmanrana
Disclaimer: The views expressed in this piece are the author’s own and does not necessarily reflect Pakinomist.tv’s editorial policy.
Originally published in the news
