By Moaaz Manzoor

Pakistan’s upcoming federal budget for FY27 is expected to remain focused on fiscal consolidation, stronger revenue generation and IMF-backed structural reforms, while offering limited relief for salaried individuals and selected industries, according to a budget preview report released by Taurus Securities Limited available with Wealth Pakistan.

The report projected the Federal Board of Revenue’s (FBR) tax collection target for FY27 at around Rs15.3 trillion, compared with a revised target of nearly Rs13.4 trillion for FY26. Overall revenue collection is expected to approach Rs19 trillion, while the fiscal deficit target may be set at 3.5 percent of GDP alongside a primary surplus target of 2 percent.

According to Taurus Securities, the government is expected to introduce nearly Rs430 billion in additional revenue measures at both the federal and provincial levels. The increase is likely to come mainly through stronger enforcement measures and broadening of the tax base rather than the imposition of major new taxes.

The report said relief measures for salaried individuals and the corporate sector remain under consideration. However, any concessions are expected to follow a “net-zero impact on revenue” approach agreed with the IMF, meaning any tax reductions would likely be offset through additional revenue-generating measures elsewhere.

Among the proposals being discussed are revisions in income tax slabs for salaried groups, a gradual reduction in super tax and corporate tax rates, incentives for exporters, and support measures for the construction and real estate sectors.

The report also highlighted the increasing role of non-tax revenues in supporting fiscal stability. Petroleum levy collections are estimated at around Rs1.7 trillion in FY27, while surplus profit transfers from the State Bank of Pakistan are expected to remain another major source of revenue support.

On the external front, the report said that Pakistan’s external sector remained relatively resilient during FY26 despite rising geopolitical tensions and higher energy prices. However, it warned that prolonged instability in the Middle East could place additional pressure on imports, remittances and inflation.

The report projected Pakistan’s economy to grow by 3.6 percent in FY26 and 4.3 percent in FY27, while headline inflation for FY27 is forecast between 8 percent and 8.4 percent. State Bank foreign exchange reserves are projected to reach approximately $21.1 billion by June 2027.

On the development side, the federal Public Sector Development Programme (PSDP) allocation for FY27 is expected to be set at around Rs1.126 trillion despite substantially higher funding demands from ministries and provinces.

The report further indicated that tariff rationalisation under the National Tariff Policy would continue during FY27, including phased reductions in additional customs duties and regulatory duties as part of Pakistan’s broader trade liberalisation agenda.

Taurus Securities said market sentiment toward the budget is expected to remain “neutral to positive,” as investors increasingly view continued IMF-backed reforms and fiscal discipline as supportive of macroeconomic stability and external financing conditions.

Credit: INP-WealthPk