Pakistan’s upcoming federal budget for 2026–27 is expected to introduce heavy taxation measures and subsidy cuts under commitments linked to the International Monetary Fund. Sources indicate the fiscal plan aims to expand revenue sharply, raising concerns over further inflationary pressure on consumers. The total budget size is projected to exceed Rs 17,000 billion.
Officials say Pakistan has agreed to additional tax measures worth Rs 860 billion as part of IMF-linked reforms. The global lender has also set an ambitious target of Rs 2,000 billion in extra GST collections. Moreover, these steps are part of broader fiscal adjustment requirements under the programme.
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The government is also preparing to withdraw subsidies on petrol and diesel, which could directly impact fuel prices. Consequently, transport and energy costs may rise further in an already high-inflation environment. Authorities argue these measures are necessary to stabilize public finances.
Sources suggest the budget may introduce a combined tax burden of around Rs 430 billion on the public through new taxes and stricter enforcement. Additionally, provincial governments are expected to contribute further revenue measures. Furthermore, petroleum levy collections are projected to increase significantly in the coming fiscal year.
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Despite agriculture contributing a large share to the economy, tax collection from the sector remains minimal. Experts warn that expanded taxation and subsidy removals could intensify inflationary pressures. However, policymakers say the strategy focuses on revenue expansion to meet external financing conditions and stabilize the economy.