Prime Minister Shehbaz Sharif announced on Wednesday that the International Monetary Fund (IMF) agreed not to tax Pakistan’s agriculture sector. He shared that the government successfully convinced the IMF despite its repeated demands. During a federal cabinet meeting, he said agriculture is already under pressure and taxing it would have added more burden. The exemption will cover items like fertilisers and pesticides, offering relief to farmers.
The prime minister also revealed a change in the income tax rate for salaried individuals earning between Rs 600,000 and Rs 1.2 million. He said this group would now pay only 1% income tax annually, down from the previously announced 5% in the FY25 budget. However, Finance Minister Muhammad Aurangzeb had earlier mentioned a 2.5% tax for the same slab in his FY26 budget speech. This contradiction has caused some confusion among taxpayers.
In addition, PM Shehbaz said government employees will get a 10% salary increase. This comes as part of efforts to support the salaried class amid inflation. He mentioned that these changes reflect the government’s commitment to protecting vulnerable groups. The government aims to strike a balance between economic reforms and public relief.
Talking about national security, the PM stated that the government has expanded its fiscal space to address defence needs. He said regional tensions, particularly with India, made it necessary to boost defence spending. The Public Sector Development Programme (PSDP) has also received a Rs1 trillion allocation to meet development targets.
PM Shehbaz concluded by saying that Pakistan has avoided a sovereign default and is now on a stable path. He emphasized that the government will continue honouring international commitments. He believes these steps will help move the country toward long-term economic growth.