Aurangzeb says Budget 2026-27 delivers on promise to move economy from stability to growth
Finance Minister Muhammad Aurangzeb said that the government’s Budget 2026-27 delivers on its commitment to shift the economy from stability towards growth during a post-budget press conference on Saturday.
He noted that last year’s discussions on economic stability included a clear commitment to move the country from stabilisation towards growth, and said the latest budget fulfils that pledge through measures aimed at supporting economic expansion.
Finance Minister Aurangzeb, flanked by Information Minister Attaullah Tarar, Minister of State for Finance Bilal Azhar Kayani, Finance Secretary Imdadullah Bosal, FBR Chairman Rashid Mahmood Langrial and Head of the Tax Policy Office Najeeb Memon, addressed a post-budget press conference
Aurangzeb said steps have been taken in the budget to promote exports, including the abolition of advance tax and the proposed abolition of super tax for all exporters.
Rs71b export subsidy, cheaper financing
A subsidy of Rs70 to Rs71 billion has been provided to ensure a conducive environment for exporters, who will also have access to financing at 4.5 per cent.
He added that duties on the import of raw materials have been reduced to bring down production costs.
“We have made significant progress, and you have read and listened to the budget speech,” Aurangzeb said, adding that the main themes of the budget are export-led growth and enabling factors.
“We have tried our best to bring all these areas into the enabling environment,” he said.
In terms of taxation, the advance tax has been abolished, the finance minister noted, adding that, in terms of super-tax, “we have decreased from 10 to 8%, which is again a very meaningful direction of travel”.
He noted that when he spoke with Prime Minister Shehbaz Sharif and the Cabinet yesterday, they specifically instructed that the super-tax be abolished for all exporters.
Saying that “this is not just a matter of taxation, it is also a matter of financing,” the finance minister said, “We are taking this refinance scheme to a different level”.
“For this, we have given a subsidy of Rs71 billion during this budget so that this financing remains available to the exporters of Pakistan at 4.5%,” he said. He continued, “In terms of policy rate and inflation, it is at 4.5%.”
Expressing gratitude to the governor of the State Bank and to those who spoke to the banks, Aurangzeb stated that it is a very big feature that this financing will be available at 4.5%, which he stated is in trillions.
Discussing bringing the cost down in terms of intermediate goods and raw materials, the finance minister stated that the mentioned financing mechanisms are “how we can increase export competitiveness”.
He added that “our focus remains on the goods, which is very important, how to bring down the goods trade deficit”.
FinMin projects $4.5b exports, announces support for IT
He also noted that services are becoming increasingly important, in particular IT services, adding that overall goods and services export will hit $4.5 billion next year.
For this reason, he said that about the IT industry and freelancers, the 0.25% FDR should be maintained.
“We made an effort to release the lowest segments of the salaried class,” Aurangzeb said, from 5% to 1% and from 15% to 13%. “But the reality is that the slabs above that and especially the surcharge element are all in front of you,” he added.
“If we had to take this budget towards pro-business, pro-growth, so construction, obviously, housing construction plays a very important role, and the transaction taxes that we have brought down, you have already seen about that,” he stated.
Discussing agriculture, he said, “This has increased by 15% year on year, and this has crossed 2 trillion, which is the overall agricultural financing.”
The finance minister also discussed the Zarkhez-e Scheme, which he said was introduced in this fiscal year and is all digital.
“More importantly, it’s collateral-free; for small farmers, it’s not being said to keep someone as an individual or to mortgage someone’s house,” he said, adding that the scheme was introduced for small farmers and is moving in the right direction.
Further, he discussed the prime minister’s agriculture loan, particularly for the youth, of which the total amount is Rs262 billion. Of the amount, Rs125 billion was allocated for agriculture, the finance minister stated.
Read: Achakzai questions state policies, Shehbaz vows response in National Assembly
He also discussed Pakistan’s need for value-added machinery, which he said is not being made in the country. “We can get it from China or other countries, which will help us actually increase the yield,” he said.
“On all these things, customs duties, additional customs duties, regulatory duties have been zeroed,” the finance minister noted.
Terming agriculture as “one of the key tenets of growth,” Aurangzeb moved to discuss what he deemed matters of deepening and broadening.
Aurangzeb backs AI-driven tax reforms
For deepening, he said, he referenced “digital monitoring and other things which are going on at the moment,” saying he especially mentioned that additional revenue is being received from this.
Discussing the new tax-operation model, Aurangzeb noted that the government wishes to take it towards automation. “We want to take it towards AI,” he said, adding, “We are reducing human intervention”.
Moving to discuss widening, the finance minister stated that the retailer scheme was mentioned in the budget.
“We made a great effort in this budget, especially what was being said that you only talk about economic stability, economic growth, where is that?” Aurganzeb said, adding, “So this time, the fiscal space that was available, we have used it extensively”.
Although he noted that “there is more to do,” he stated, “I will say this again, the feedback that we have received is that we are moving towards economic growth”.
He added that the budget is going to play a very pivotal role in this regard.
Kayani calls it a budget for salaried class
Minister of State for Finance Kayani noted that “fundamentally, this is the budget of the salary class, this is the budget of the industrialists, this is the budget of the exporters, this is the budget of the construction sector”.
Kayani added, “this is the budget of the person who wants to build his own house and who does not have the means to do so”.
“These are the other parts of our economy which needed resources so that our economy can move forward,” the minister said, noting that the budget aims to reduce the burden on citizens.
He stated that the prime minister, finance minister, and the entire economic team “have always admitted that very few people are carrying the burden of this tax on their shoulders”.
“The salary class is at the top of the list,” Kayani said, adding that “that is why it has always been said that the government will give relief to the salary class when it gets a chance”.
Kayani also discussed the reduction in the minimum and advance taxes for exporters, “whether it was the elimination of the first six slabs of super-tax and the last slab had to be reduced from 500 million to 10% to 8%”.
“These were basically the primary demands of our exporters and our formal industry,” he said.
He continued, “When we talk about decreasing the tax burden, we have not limited that consultation and as a result, by talking to our business community, the real issues that came to us, to decrease the tax burden, the primary levers that were identified were addressed by the government”.
He noted that a week before the budget, PM Shehbaz held a detailed meeting with all the chambers in the country, including the FPCCI. “Whether it was Lahore, Karachi, Quetta, Peshawar, Faisalabad, Sialkot,” he said, “everyone from their respective areas that are a part of our economy brought their issues”.
He added that a separate meeting was held with other industry leaders, including the Pakistan Business Council. “As a result of these consultations, we not only provided relief measures in this budget, but also continued to make improvements throughout the year.”
GST relief for welfare, shipping sector
Discussing taxes that impact the social sector, Kayani mentioned the GST exemption for the Pink Tax or the GST exemption for contraceptives. “These are also important requirements for us in terms of population control and women’s reproductive health, which were fulfilled by the government of PM Shehbaz”.
Kayani further discussed the GST exemption for the shipping industry. “During this war and conflict, we realised the importance of having our own shipping fleet and how strategically important it is for you,” he said, noting that this is why the matter was kept in view.
“As for export financing and home allocations, under the Benazir Income Support Programme, your weakest sectors, over 10 million households, have been increased through women,” the minister stated.
He added that this is a public budget, and because the public supported the prime minister during a difficult time, the stabilisation phase, the improvement that he had promised has begun. “This will provide employment, trade, exports to everyone, and will increase the purchasing power of our brothers and sisters”.
Tarar hails transparency reforms, says budget benefits all sectors
Information Minister Attaullah Tarar termed the budget “relief-oriented” and said the reforms of the FBR are unprecedented and historic. “There have never been such major reforms in the history of the country,” Tarar said.
He added, “If I say that the entire structure of the FBR is free of recommendations and political influence, then this will not be wrong. The political culture has changed.”
This change, he said, started from the top and the PM led it. “There was a leakage of billions of rupees and there was collusion, there was corruption,” he said, adding that after that, “if you talk about transparency, then transparency was ensured through faceless systems, through the appraisal that started at the ports. And now it will go to every district at an industrial level”.
Referring in particular to the sugar industry, he stated, “There is an addition of Rs60 billion, why should a person with a salary take the burden of the sugar industry whose profits are massive, but their contribution to the tax collection is less?”
He noted that a big compromise was created for exporters, who will now be competitive.
“We are happy when you see the tag of Made in Pakistan in any foreign country,” he said, adding that the country’s products will now be more competitive in that region. He also said that the foreign exchange reserves would increase, aiding a move towards export-led growth.
“I think for the middle class, especially, a big compromise has been created for the lower middle class through the Apna Ghar programme,” Tarar said. He added that this does not only include the development and housing sector as “there are entire industries behind it. It needs cement, it needs concrete, it needs fittings. There are 12 industries that feed the housing sector from behind”.
“I think that this is everyone’s budget. This is the budget of the workers, this is the budget of the farmers, this is the budget of the wage earners, this is the budget of the industrialists,” Tarar said.
In regards to women, he added, the pink tax that has been abolished on sanitary and hygiene products, coming down from 18% to 0%. “So I believe that every class of society has been catered for in this budget.”
The information minister recalled that many people had bet on the country defaulting, saying that the government tolerated such criticism for two years. “But today, I would like that the way you keep correcting us with criticism, that you open your heart and praise us that way, in this budget, that the entire economic team has made the impossible possible”.
Tarar went on to say that the first economic objective was to achieve stability, which was done, stating that the International Monetary Fund, in Davos, “stood in front of the whole world and said that the structural reforms that Pakistan has done, the macroeconomic stability that it has done, and the homegrown agenda that it has, that is commendable”.
Further, he said that initiatives regarding the cashless economy had helped bring a large undocumented segment of the economy into documentation. “Tax leakage was also happening from there, because it was cashless,” he said.
He also mentioned that another initiative introduced in the budget would allow any credit or debit card payment made online from Pakistan for anything; the tax on that was reduced from 5% to 0.5%.
The budget, Tarar said, “provides relief, a way forward, and a path towards growth, which the prime minister had promised you”.
Aurangzeb warns of prolonged energy disruptions
During the Q&A session, Aurangzeb discussed oil prices, particularly in regard to the US-Iran conflict.
“We saw the first impact actually in April, when our oil bill went up by $1 billion. But since then, the way we have been managing, that dropped to half a billion dollars during May,” the finance minister said.
Expressing hope that the conflict “comes to an end sooner than later,” Aurangzeb stated that energy infrastructure has been hit and so, “to expect that the Strait of Hormuz will open up, that things will normalise, or whether it’s LNG or other resources that have been hit, will normalise in a week or two weeks, that’s not going to happen”.
“So it is going to spill over into the next fiscal year,” he added.
The finance minister also expressed gratitude to the provinces for the “way they have sort of stepped up in helping us for some of the more pressing needs”.
“Some of those have been reflected in the defence budget,” he added, noting that for this year, that arrangement is in place and “from our perspective, it’s a three-year discussion and we will take that forward with the provinces for the next couple of years as well”.
The finance minister also highlighted the need to move towards public-private partnership, citing the Sindh government as an example. Mentioning in particular the projects initiated in Thar, Aurangzeb stated that the Sindh government was a good example of the public-private partnership.
Discussing the petroleum levy, the finance minister clarified that “the amount of the levy is not increasing”.
In regard to the merger of BOI and SIFC, he stated that there is only duplication, with investment and facilitation the objectives of both institutions.
He also stated that both FDI and the repatriation of profits are necessary, as well as the terms and conditions and contracts that they come under.
Answering a question, the finance minister particularly stressed the need to remain vocal in regards to population growth and child stunting. “We talked about contraceptives yesterday and the tax rate has been reduced because we have to bring a break.”
He added that the government was working with the minister of health, as well as with the provinces, to come up with a comprehensive plan regarding the matter.
Read more: Rs18.8tr outlay targets growth push
Further, discussing the NFC Award, the finance minister affirmed that all provinces will be taken on board.
Meanwhile, the chairman of the FBR noted that digitalisation of the institution had been achieved long ago, however, the platforms that were created were not integrated, ultimately deteriorating their quality.
In regard to broadening of the tax net and consultations with the IMF regarding the budget, the finance minister clarified, “We are in a constant, because we are in a fund program, we are in a constant consultation mode”.
“Whatever the discussion is, we are moving forward to the extent that we are in the fund program. This is a requirement and that’s how it’s going to be taken forward,” he said.
He also clarified, “We talked about harmonization and distortions,” adding that “primarily, it’s all about enforcement and compliance”.
Aurangzeb also stated that it is “the leakage and pilferage” which the government is focused on.
“It’s a combination. Deepening is about stopping that pilferage and leakage but being smart about it,” he noted.
Meanwhile, regarding taxes on shopkeepers, Kiyani noted that there is a basic 1% turnover tax for a shopkeeper who has annual sales below Rs200 million. “And the sale that he declares, which will be available in local languages and there is an app for it which will be developed and sold in front of you so that no shopkeeper has to pay the fees of the tax agent. He can pay it himself easily,” he stated.
He added that there is a “limit of adjustment”, noting that one must pay up to Rs25,000 even if their withholding tax is more or equal to their tax liability.
On Friday, the finance minister unveiled a Rs18.8 trillion federal budget, proposing to significantly reverse punishing taxes imposed on the salaried class and the real estate sector while deepening economic liberalisation.
The Rs18.8 trillion expansionary budget was 20% or Rs3.1 trillion higher than the outgoing fiscal year’s revised outlay, indicating the government’s intentions to shift the gear from consolidation to spending.
Despite significant contributions by four provinces, the federal government has announced a Rs7 trillion deficit, which is higher than this fiscal year and will be filled by taking more loans. The government also plans to get $23.4 billion in foreign loans, including $2 billion through Euro and Panda bonds.Read More
