The Ministry of Finance has announced a special relief allowance for the armed forces in the next fiscal year. Officers will receive 50% of their basic salary as allowance, while junior commissioned officers and soldiers will get 20%. The finance secretary revealed this during a parliamentary committee briefing, but the ministry did not disclose the full financial cost despite concerns raised by opposition members.
At the same time, the public sector development budget has been reduced from Rs1.1 trillion to Rs967 billion, with concerns that even this amount may not be fully spent before June 30. Lawmakers warned that this cut would affect growth targets, especially the GDP estimate of 2.7%, and could disrupt key development programs across the country.
Finance Minister Muhammad Aurangzeb expressed hope that the policy rate would decline to single digits by year-end, as inflation improves and the fiscal position stabilizes. He said the government expects about $1 billion in foreign inflows this month through a syndicated bank arrangement backed by the Asian Development Bank. If this happens, foreign reserves could rise to $14 billion by June’s end.
The government also plans to raise Rs1.468 trillion next year through the petroleum development levy, up from Rs1.161 trillion this year. Petrol and diesel will now carry an average levy of Rs80 per litre. Additionally, the government removed the upper cap on this levy, using the extra funds to support power subsidies and the Quetta-Karachi highway.
Lawmakers voiced concern over multiple issues, including the low tax-to-GDP ratio, solar panel taxes, slow privatisation, and falling industrial and agricultural growth. The committee also highlighted problems like border smuggling, weak customs enforcement, and taxes on bank transactions, urging reforms to improve efficiency, transparency, and social protection programs for the public.