- Increase in the defense budget linked to national security priorities.
- No pressure from the IMF on the federal budget, explains Ahsan Iqbal.
- Water projects have priority in response to Indian aggression.
Islamabad: the Minister of Planning Ahsan Iqbal confirmed that the defense budget will be increased in the next budgetary plan, while ensuring that the government intends to relieve the public, The news reported on Sunday.
He added that there was no pressure from the International Monetary Fund (IMF) concerning the finalization of the budget.
Addressing a delegation of engineers led by the Institution of Engineers Pakistan (IEP), the secretary general, the engineer Ameer Zameer, Iqbal, said that water -related projects are being priority in response to the aggression linked to India water.
He added that dedicated funds would be allocated to such projects in priority to ensure long -term safety of the country’s water.
IQBAL said the government will ensure the early completion of all projects related to hydroelectricity, including the Diamer-Bhasha dam, to prevent India from taking advantage.
Iqbal said that the delay in the next federal budget is due to the Prime Minister’s foreign visit and the Eid holidays, not to the IMF pressure. He stressed that there was no IMF pressure on the budget and that the government was determined to relieve the people.
He also declared that the security situation requires an increase in the defense budget and announced the introduction of a paid internship program for young engineers.
The Minister of Planning reassured the engineers that their requests would be incorporated into the upcoming budget and express their satisfaction that the IMF is satisfied with the government’s economic policies.
Regarding political issues, he said that the country had remained united following the recent military success against India.
He criticized the founder of the PTI, saying that the response to the recognition of Coas Field Marshal Syed Asim Munir for exemplary leadership was not positive for Imran Khan.
He concluded by declaring that the government would not take any measures that harm national unit or cohesion.
Meanwhile, Pakistan and the IMF have continued parliays to finalize the upcoming budget in the middle of the FBR proposal to reduce the rate of taxable panels of 2.5%employee income.
IMF staff inquired about “alternative measures” only on the side of income tax to make up the gap of 56 billion rupees due to the reduction offered for the salaried class in the following budget.
Although the IMF has not agreed to increase the taxable ceiling by 0.6 million rupees to RS1.2 million, but there is a proposal considered to reduce the rate of this slab to a token rate by 1% compared to the existing rate of 5%.
For all remaining slabs up to 35%, the maximum slab is offered to be reduced to 32.5%. There is a supplement for revenues of 1 million rupees per month at a rate of 10%. There is also a super tax on higher income slices, so it is proposed to gradually reduce.
On the spending side, it is studying to increase the salaries of defense / military officials, and various proposals are being studied in this regard. The salary and the pension on the civil side will also be increased, but it will be in accordance with the proportion of inflation based on the IPC.
Taking into account the urgent requirements of the overall defense budget as well as their salary, the objective of collecting FBR taxes for the next budget could be increased from RS14.05 Billion to RS14.2 Billion, but the finalized figure in income collection was still underway because it depends on the expenses of the Ministry of Finance.
According to the IMF’s announcement on Saturday, the fund’s mission, led by Nathan Porter, concluded his staff visit to Islamabad, which began on May 19. The staff visit focused on recent economic developments, the implementation of the program and the budgetary strategy for the financial year (exercise) 2026.
The IMF, in its warning, said on its website that these end -of -mission press releases include declarations of IMF staff teams that transmit preliminary results after a visit to a country. The opinions expressed in this declaration are those of the staff of the IMF and do not necessarily represent the opinions of the IMF executive council. This mission will not lead to a discussion of the board of directors.
At the end of the visit, Nathan Porter said: “We organized constructive discussions with the authorities on their budgetary proposals for the 201026 financial year and their broader economic policy, and the agenda of the reform supported by the prolonged fund 2024 and the installation of 2025 resilience and durability (RSF).
The Pakistani authorities have reaffirmed their commitment to budgetary consolidation while protecting social and priority expenditure, aimed at a primary surplus of 1.6% of GDP during the 201026 fiscal year.
Discussions have focused on actions aimed at improving income – including strengthening compliance and widening the tax base – and prioritizing expenses. We will continue discussions to welcome ourselves to the budget for the fiscal year 26 of the authorities in the coming days.
Discussions also covered reforms in the current energy sector aimed at improving financial viability and reducing the high cost structure in the Pakistan power sector as well as other structural reforms that will help promote sustainable growth and promote a more game area for businesses and investments.
Authorities also underlined their commitment to ensure healthy development of macroeconomic policies and construction pads. In this context, the maintenance of an appropriate monetary policy dependent on data remains a priority to ensure that inflation is anchored in the target beach in the central bank of five to 7%.
At the same time, the reconstruction of exchange reserve buffers, the preservation of a fully functional FX market and the permission of greater exchange rate flexibility are essential to strengthen resilience to external shocks.
The mission thanked the federal and provincial authorities for their hospitality, its constructive discussions and its strong collaboration and its commitment to good policies.
The IMF team will remain committed and will continue their close dialogue with the authorities. The next mission associated with the next EFF and RSF journals is expected in the second half of 2025, concluded the press release.
The sources indicated that the IMF had requested alternative options to fill the gap of RS56 billion if the tax rates for the salaried class are reduced. The FBR proposed certain TPS measures, but the IMF did not accept this.
Then, the FBR proposed two measures to increase the retention tax on imports by 2%, with the exception of raw materials and, secondly, increase the tax on capital gain (CGT) for companies from 15 to 20 and 25%.
The IMF side arose that on the one hand, the government would implement a new pricing policy, then the WHT rate is proposed to be increased, which is contradictory. Second, the increase in the CGT for companies will further increase the tax burden of the business sector.
Meanwhile, the Director General of the World Bank (WB) for operations Anna Bjerde concluded a two -day visit to Pakistan. The world lender announced on Saturday that during her visit, Anna Bjerde congratulated the authorities for the momentum of the reform and underlined the need for continuity of implementation to maintain economic stability and cause a stronger investment and growth in the private sector.
Bjerde met Prime Minister Shehbaz Sharif and expressed his assessment for the collaboration on the new partnership manager of the World Bank group over 10 years with Pakistan. They also discussed the need for coordinated reforms at the federal and provincial levels to ensure sustained and inclusive growth.
“The path from Pakistan to sustainable economic recovery and poverty reduction is based on complete reforms that prioritize human capital, macroeconomic stability, climate resilience, sustainable energy growth and private sector,” said Bjerde.
“During my visit, we discussed the next stages of the government’s reform program, in particular in the tax, digital and energy sectors, as well as the country’s potential in terms of growth and entrepreneurship led by private private jobs, in particular to create quality jobs for women and young people.”
She also met the Minister of Economic Affairs and the Governor of BB Groups Ahad Khan Cheema, Minister of Finance and Revenues Muhammad Aurangzeb, Minister of Planning, Development and Special Initiatives, Ahsan Iqbal, Minister of Energy (Division of Energy) Sardar Awais Laghari, Minister of Pauter of Poverty and Social Security Syed Imran Ahmad Benazir Revenue Revenue Program for income support program for the Rubina income support program, Rubina Board of Repair of Repair of Repair of Repair of Repair of Reveine, Benazi the President Rashid Mahmood Langrial, members of the National Assembly, Senate, Managers and other government representatives.
The discussions have focused on the implementation of the country’s partnership framework to help meet the country’s most critical socio-economic challenges, in terms of human capital development, in particular for women and girls, access to water and sanitation, climate resilience, reduction in natural disaster risks and the foundations for growth and creation of private jobs.
Bjerde had the opportunity to visit the project sites supported by WB in the district of Shaheed Benazirabad in the Sindh, where she was accompanied by the Chief Minister of Sindh Murad Ali Shah and the Minister of Health of Sindh, Dr. Azra Fazal Pechuho. She and the WB delegation were organized by the First Lady of Pakistan and member of the National Assembly Asefa Bhutto Zardari.
The visit included meetings with the beneficiaries and staff of the Emergency Housing Reconstruction project for the Sindh 2022 floods, as well as an exchange with medical staff and patients from a basic health unit supported by the National Health Support Program.
During his stay at the Sindh, Bjerde exchanged with chief Minister Shah and members of his cabinet on current and planned projects to support the development of the province.