Pakistan’s federal government and the Pakistan Peoples Party (PPP) have reached a key fiscal agreement ahead of the next budget. The deal finalises arrangements on tax targets and revenue sharing. It directly affects federal finances, provincial contributions, and budget planning for the upcoming fiscal year.
The breakthrough came after successful negotiations between a government technical committee and PPP representatives. Deputy Prime Minister Ishaq Dar chaired the discussions, which focused on fiscal coordination. Moreover, both sides agreed on a framework to manage additional tax revenues without altering the NFC formula.
Under the agreement, the federal government will receive additional revenue linked to next year’s tax target. However, officials confirmed that the National Finance Commission formula will remain unchanged. Furthermore, provinces will continue receiving allocations based on the existing structure, ensuring continuity in resource distribution.
The deal also outlines revised revenue expectations for the upcoming fiscal year. Officials said the tax target for the next year is set at Rs15,264 billion. In contrast, the current fiscal year target stands at Rs13,005 billion, reflecting a significant increase in revenue expectations.
Meanwhile, provinces are expected to contribute additional funds to the federal pool through adjusted arrangements. Sources said Punjab, Sindh, Khyber Pakhtunkhwa, and Balochistan will provide varying amounts through grants. However, these contributions are expected to be adjusted and returned in future fiscal cycles under agreed terms.