As Finance Minister Muhammad Aurangzeb prepares to present the national budget on June 10, economists stress the importance of strategic budget planning. The country faces a tough balancing act—meeting defence needs without damaging economic progress.
Finance Minister Promises Bold Moves
Aurangzeb has hinted at bold fiscal reforms. He aims to reduce the tax burden on the salaried and documented sectors. Through digitisation, the government wants to shift focus to untapped segments, like retailers and wholesalers, and promote cashless transactions.
A Narrow Policy Corridor
Ali Hasanain, associate professor at LUMS, believes the government is operating within a narrow fiscal corridor. On one side are steep IMF targets, including a 1.6% primary surplus of GDP. On the other, growing defence needs and global economic pressure loom large.
He warns that restoring defence purchasing power fully would consume nearly 1.13% of GDP. That amount, he says, equals the fiscal buffer secured through tough IMF reforms. Overspending in this area could undermine social programs and long-term stability.
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Avoiding Short-Term Fixes
Hasanain stresses that while defence is crucial—especially after recent Pakistan-India tensions—the government must avoid reactive spending. Instead, it should focus on maintaining macroeconomic gains and building fiscal space.
He also supports taxing petroleum, retailers, and wholesalers, calling it a practical move to expand the tax net. However, he warns that such steps will test the state’s political resolve and administrative strength.
Navigating Global Shifts
With the US and EU planning new tariffs on Chinese goods, including electric vehicles, Pakistan must brace for increased trade volatility. Hasanain believes this is the moment to invest in logistics, trade facilitation, and attracting redirected foreign investment.
He concludes that this year’s budget must go beyond numbers. It must show vision, discipline, and readiness to join the global economic shift. Clinging to outdated policies or political optics could cost Pakistan valuable ground.
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