Pakistan’s latest budget offers some targeted relief. Still, it essentially amounts to incremental tweaks rather than a bold strategy to reverse long-term economic decline, control inflation, create jobs, or reduce poverty. Minor adjustments provide limited breathing room for certain groups, yet the budget fails to address the most critical fiscal question: What is the government doing to reduce the debt burden?

Officials claim that the tax revenues have more than doubled from Rs 6 trillion in 2021-22 to Rs 12.98 trillion in 2025-26. This is highly misleading. They have grown by just 25.5% over four years in real terms (that is, adjusted for inflation), mainly through indirect taxes on consumption and utilities and by placing an additional burden on the corporate sector and the salaried class.

Most analysts focus on headline deficits and tax collections, but pay far less attention to how federal revenues are actually allocated. This table provides a clearer picture by showing net federal revenues—tax and non-tax revenues after transfers to provinces—and comparing them with interest payments on debt and defence spending (including military pensions).

Pakistan’s latest budget once again chooses political expediency over real reform. It offers modest tax relief to salaried employees and........

© The Friday Times