ISLAMABAD: The government has flagged a series of critical risks to next year’s budget and medium-term outlook, including slower than targeted GDP gro­wth, inflation shocks, exchange rate volatility, lower revenue buoyancy, debt servicing costs, poor performance of state-owned entities (SOEs) and unexpected climatic and other natural disasters.

In a written statement on fiscal risks placed before parliament, Finance Minister Muhammad Aurangzeb and Finance Secretary Imdadullah Bosal divided these risks into seven categories — macroeconomic, revenue, debt, SOEs, climate change, natural disasters, and other contingent liabilities — and quantified their possible impact on fiscal deficit.

They suggested mitigation measures in case one or more of these risks materialise during 2025-26.

According to the statement, the macroeconomic risks arise from slower-than-expected GDP growth, inflation shocks, and exchange rate volatility. “A one percentage point slowdown in GDP growth could reduce government revenues due to lower tax collection and increase exp­enditures on automatic........

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