Pakistan’s federal budget for FY2025-26 has come at a critical time. The country is going through a fragile phase of economic recovery; provisional GDP for FY stands at a recovering & stable rate of 2.68 percent, remittances are increasing, inflation rates have declined and primary surplus currently constitutes 3 percent of the GDP (March-July 2024-25).

Economists and fiscal experts are now debating whether the determined budgetary outlay will help maintain this trajectory or not. However, with persistent structural challenges in the country, i.e., rising gender inequality and regional disparity, growing climate vulnerability and a youth bulge, one also needs to analyze the situation based on considerations for resilient growth and inclusive development, mandates that can only be achieved through equitable social sector investment. Will this fiscal outline help align national goals with SDGs as well as move forward the mandate of URAAN Pakistan with its 5Es framework?

To have a quick overview, the budget has assumed a modest economic rebound for the fiscal year 2025-26, characterized by an economic growth rate of 4.2 percent but an inflation rate as high as 7.5 percent. Amidst the challenging environment of two IMF Programmes, the Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF), the budget has somewhat prioritised fiscal consolidation and revenue-based targets; 18 percent taxation on imported solar panels, higher petroleum development........

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