Budget in Brief

FEDERAL BUDGET 2025-26

GOVERNMENT OF PAKISTAN FINANCE DIVISION ISLAMABAD

PREFACE

Budget in Brief gives an overview of the federal budget for FY2025-26. It provides a glimpse of key priorities and objectives of the Federal Government, offers a summary of revenue and expenditures, fiscal deficit targets and the corresponding financing plan. The document also provides a detailed breakdown of tax and non-tax receipts, projected share of provinces under the NFC Award, capital and external receipts, and current expenditures along with its functional classification. Allocations for subsidies, grants and transfers, as well as PSDP are also provided.

The document can be accessed on Finance Division’s website (www.finance.gov.pk). Further details on the contents of this document are available in other budget documents.

IMDAD ULLAH BOSAL

Secretary to the Government of Pakistan

Finance Division

Islamabad, the 10^th June, 2025

CONTENTS

PART - I

Table - 1

Budget 2025-26 at a Glance

Table-1 presents position of overall Resources and Expenditure for FY2025-26

(Rs. in Billion)

Table - 2

Fiscal Deficit & Financing of Budget 2025-26

Table-2 shows Fiscal Deficit and Financing for FY2025-26

(Rs. in Billion)

Table - 3

BE & RE FY2024-25 and BE FY2025-26 Table-3 presents important percentages of Budget & Revised Estimates of FY2024-25 and Budget Estimates of FY2025-26.

(Rs. in Billion)

PART - II

DETAILED BUDGET ESTIMATES Budget Estimates 2024-25 Revised Estimates 2024-25 Budget Estimates 2025-26

TABLE - 4

REVENUE RECEIPTS

Table-4 presents the detail of Revenues collected by FBR.

( Rs in Million)

TABLE - 5

NON-TAX REVENUE RECEIPTS

Table-5 shows the detail of Non-Tax Revenues collected by other government entities.

Contd…

(Rs in Million)

Distribution of Resources among Federation and Provinces

Pakistan is a Federal democracy. In order to maintain inter-governmental fiscal relationship, Article 160 of the Constitution provides for setting up of a National Finance Commission (NFC) with intervals not exceeding five years. The mandate of NFC is to make recommendations to the President for the distribution of resources between the Federal and Provincial Governments. The recommendations of the NFC are given legal cover through a President's Order No. 5 of 2010. The relevant provisions of President's Order No. 5 of 2010 as amended vide No. 6 of 2015 are as under:

(i) Distribution of Revenues.- (1) The divisible pool taxes in each year shall consist of the following taxes levied and collected by the Federal Government in that year, namely:─

• (a) taxes on income;

• (b) wealth tax;

• (c) capital value tax;

• (d) taxes on the sales and purchases of goods imported, exported, produced, manufactured or consumed;

• (e) export duties on cotton;

• (f) customs duties;

• (g) federal excise duties excluding the excise duty on gas charged at well-head; and

• (h) any other tax which may be levied by the Federal Government.

(2) One percent of the net proceeds of divisible pool taxes shall be assigned to Government of Khyber Pakhtunkhwa to meet the expenses on war on terror.

(3) After deducting the amounts as prescribed in clause (2), of the balance amount of the net proceeds of divisible pool taxes, fifty-six percent shall be assigned to provinces during the financial year 2010-11 and fifty-seven and half percent from the financial year 2011-12 onwards. The share of the Federal Government in the net proceeds of divisible pool shall be forty-four percent during the financial year 2010-11 and forty-two and half percent from the financial year 2011-12 onwards.

(ii) (ii) Allocation of shares to the Provincial Governments.- (1) The Province-wise ratios given in clause (2) are based on multiple indicators. The indicators and their respective weights as agreed upon are:-

(2) The sum assigned to the Provincial Governments under Article 3 shall be distributed amongst the Provinces on the basis of the percentage specified against each:─

(3) The Federal Government shall guarantee that Balochistan province shall receive the projected sum of eighty-three billion rupees from the provincial share in the net proceeds of divisible pool taxes in the first year of the Award and any shortfall in this amount shall be made up by the Federal Government from its own resources. This arrangement for Balochistan shall remain protected throughout the Award period based on annual budgetary projections.

(iii) Payment of net proceeds of royalty on crude oil. ─Each of the provinces shall be paid in each financial year as a share in the net proceeds of the total royalties on crude oil an amount which bears to the total net proceeds the same proportion as the production of crude oil in the Province in that year bears to the total production of crude oil.

(iv) Payment of net proceeds of development surcharge on natural gas to the Provinces.─ (1) Each of the Provinces shall be paid in each financial year as a share in the net proceeds to be worked out based on average rate per MMBTU of the respective province. The average rate per MMBTU shall be derived by notionally clubbing both the royalty on natural gas and development surcharge on Gas. Royalty on natural gas shall be distributed in accordance with clause (1) of Article 161 of the Constitution whereas the development surcharge on natural gas would be distributed by making adjustments based on this average rate.

(2) The development surcharge on natural gas for Balochistan with effect from 1st July 2002, shall be re-worked out hypothetically on the basis of the formula given in clause (1) and the amount, subject to maximum of ten billion rupees, shall be paid in five years in five equal installments by the Federal Government as grants to be charged on the Federal Consolidated Fund.

(v) Grants-in-Aid to the Provinces.- There shall be charged upon the Federal Consolidated Fund each year, as grants-in-aid of the revenues of the province of Sindh an amount equivalent to 0.66% of the provincial share in the net proceeds of divisible pool as a compensation for the losses on account of abolition of octroi and zilla tax.

(vi) Sales tax on services.- NFC recognizes that sales tax on services is a Provincial subject under the Constitution of the Islamic Republic of Pakistan, and may be collected by respective Provinces, if they so desired.

The President has constituted 10th NFC in the year 2020 for consideration of the distribution of resources.

Details of Provincial share of Federal Taxes for budget estimates and revised estimates of 2024-25 and budget estimates of 2025-26 are given below:

TABLE - 6

DETAILS OF DIVISIBLE POOL TAXES (TRANSFERS TO PROVINCES)

(Rs in Million)

TABLE - 7 CAPITAL RECEIPTS (NET)

Table-7 explains Capital Receipts (Net) and their sources. It comprises of Net Lending to Provinces, PSEs and Others, and Non Bank Borrowing.

(Rs in Million)

TABLE - 8

PUBLIC ACCOUNT (NET)

Table-8 indicates the position of Public Account of Federation (Net):

(Rs in Million)

TABLE - 9

EXTERNAL RESOURCES

Table-9 indicates the details of Net External Receipts

(Rs in Million)

TABLE - 10

CURRENT EXPENDITURE

Table-10 presents summarized form of Current Expenditure.

(Rs in Million)

*RE 2024-25 as of 16th May, 2025.

TABLE - 11 FUNCTION WISE CURRENT EXPENDITURE

Table-11 shows details of Current Expenditure which is divided into ten (10) functional items as per Chart of Accounts.

The details of Current Expenditure under above ten Functions are as under:

(1) GENERAL PUBLIC SERVICE

(Rsin Million)

(2) DEFENCE AFFAIRS AND SERVICES

(Rs in Million)

(3) PUBLIC ORDER AND SAFETY AFFAIRS

(Rsin Million)

(4) ECONOMIC AFFAIRS

(5) ENVIRONMENT PROTECTION

(Rsin Million)

(6) HOUSING AND COMMUNITY AMENITIES

(Rsin Million)

(7) HEALTH AFFAIRS AND SERVICES

(Rsin Million)

(8) RECREATION, CULTURE AND RELIGION

(9) EDUCATION AFFAIRS AND SERVICES

(10) SOCIAL PROTECTION

(Rsin Million)

In order to alleviate the impact of inflation on citizens, especially the poor segments of society, the Federal Government spends a fairly large sum on providing power, food and other subsidies.

TABLE - 12 SUBSIDIES

Table-12 shows detail of subsidies.

Contd…..

(Rs in Million)

TABLE - 13

GRANTS AND TRANSFERS

Table-13 gives details of Grants and Transfers to provinces and other entities as provided by the Federal Government

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(Rsin Million)

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(Rsin Million)

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(Rsin Million)

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(Rs in Million)

TABLE - 14 CURRENT LOANS & ADVANCES

Table-14 shows Current Loans & Advances provided by Federal Government to Govts. of AJK, GB and various institutions as well as to Govt. Servants to enable them to meet their financial requirements. The details are as under:

TABLE - 15 CURRENT INVESTMENTS

Table-15 shows detail of Current Investments through equity.

(Rsin Million)

TABLE - 16

DEVELOPMENT LOANS AND ADVANCES

Table-16 shows Development and External Development Loans & Advances made by Federal Government to Provinces, AJK & GB, PSEs, Financial / Non-Financial Institutions, District Governments / TMAs and others to assist them in carrying out their Development Programmes.

Development Loans and Advances are part of project aid disbursed by foreign donors and are used to finance PSDP. The loans are re-lent by the Federal Government to Provincial Governments and PSEs.

(Rs in Million)

Public Sector Development Programme (PSDP)

The Public Sector Development Programme (PSDP) is the main instrument for improving the socio-economic conditions in the country and achieving the macroeconomic & development objectives and targets set by the government.

TABLE - 17

PSDP 2025-26

Table-17 shows the details of PSDP for FY2025-26 in respect of Ministries / Divisions / Departments / Corporations and for Special Packages / Relief.

Contd….

(Rsin Million)

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(Rs in Million)

TABLE - 18 GENDER, CLIMATE AND DISASTER

TABLE - 19

GREEN COMPONENT IN SUBSIDIES (Rs in Million)

*** Categories:**

A. Directly Favorable

B. Indirectly Favorable

C. Neutral or not assessed D. Mixed

E. Potentially unfavorable

TABLE - 20

GREEN COMPONENT OF REVENUES

(Rs in Billions)

TABLE - 21

DEMAND-WISE EXPENDITURE BUDGET ESTIMATES 2025-26

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(Rs in Million)

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