Preparations for Pakistan’s federal budget for the fiscal year 2026–27 have officially begun, with the government finalizing its key priorities. According to the Ministry of Finance, the government has set an estimated GDP growth target of 5.1%, while inflation is expected to remain around 6.5% in the upcoming fiscal year.
A major focus of the new budget will be environmental sustainability and climate-related reforms. Special emphasis will be placed on green taxes, non-tax revenue, and climate subsidies. All ministries have been instructed to clearly identify environmental and climate-related expenditures, and the tagging of climate-related income and spending has been made mandatory. The government also plans to further strengthen the disaster budgeting framework in view of Pakistan’s vulnerability to natural disasters.
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According to budget documents, non-tax revenues will be assessed based on their environmental impact, and levies on pollution-causing activities will be aligned with national climate goals. Priority areas for green revenue generation include energy, transport, and pollution control. Separate monitoring of disaster-related expenditures will be introduced to ensure transparency and effectiveness.
Subsidies will be categorized under climate adaptation and mitigation. Climate adaptation measures will include agricultural insurance and climate-resilient infrastructure, while mitigation subsidies will focus on clean energy projects and electric vehicles. The government has emphasized that transparency and achievement of environmental targets will remain central to the budget framework.
The Ministry of Finance has issued the Budget Call Circular, approving the official budget preparation schedule. An interim economic framework will be prepared during the current month, while a mid-year review report will be presented to the National Assembly in February 2026. Ministries have been directed to submit revised estimates of revenues, expenditures, and development projects by 20 February.
Budget review committee meetings will be held between 30 March and 12 April 2026, with exchange rate information to be shared on 15 April. The Budget Strategy Paper is expected to be approved by 20 April, and budget ceilings for current and development spending will be issued between 21 and 25 April. Final budget documents will be completed by the end of May, while quarterly budget estimates must be submitted by 30 June.
Meanwhile, preparations are also underway for Pakistan’s third economic review with the International Monetary Fund (IMF). IMF’s review mission is expected to visit Pakistan next month, and if the review is successfully completed, the country is likely to receive the next tranche of $1 billion. Government officials say negotiations will focus on securing relief for the public, salaried class, and industrial sector, in line with directives from the Prime Minister.
The Prime Minister has instructed authorities to develop strong proposals and recommendations to persuade the IMF on relief measures. A high-level delegation has already held discussions with the IMF Managing Director, and further engagement is planned over the coming weeks to align fiscal priorities with public relief efforts.
