PRIME Minister Shehbaz Sharif recently highlighted the proactive efforts of the government team to implement the projects and measures outlined in the new budget. During a meeting with key business figures, the Prime Minister assured that the country is on the right economic track and announced various relief measures for the public. However, this optimism has not resonated with everyone. Many ordinary citizens, lower-income groups, traders, salaried employees and daily wage workers have labelled this budget as disastrous for their livelihoods.
Finance Minister Mohammad Aurangzeb has himself acknowledged that there is no good news for salaried individuals in this budget. The budget’s ambitious target of raising 13 trillion rupees (46.66 billion dollars) in tax revenue has sparked discontent among both the government’s allies and the opposition. Political parties outside the ruling coalition have demanded relief for the salaried class and the poor.
The revenue collection target for the fiscal year 2025 is nearly 40% higher than last year’s, drawing criticism from the business community. According to Finance Minister Aurangzeb, Pakistan is making positive strides toward a new IMF program and expects to secure a favourable agreement in July. Following the completion of a 3 billion dollar program, Pakistan has initiated talks with IMF officials for a new loan. The government claims that the previous IMF bailout helped prevent sovereign debt defaults. In May, the IMF sent a delegation to negotiate with the new government.
Pakistan has sought loans from the IMF due to a combination of financial and economic challenges, including significant fiscal and current account deficits, declining foreign exchange reserves and rising public debt. These vulnerabilities have been exacerbated by external shocks such as commodity price fluctuations, political instability and inconsistent policies.
The increase in tax targets includes a 48% rise in direct taxes and a 35% rise in indirect taxes compared to revised estimates for this year. Non-tax revenue, including petroleum levies, has seen a 64% increase. Taxes on textiles, leather products and mobile phones will rise to 18%, and taxes on capital gains from real estate will also increase. Workers will face direct income taxes, affecting their savings and purchasing power, which could reduce sales of goods and negatively impact production and business sectors.
Opposition parties, supported by imprisoned former Prime Minister Imran Khan, and major businesses, reject the budget due to inflation concerns and potential industry closures. Analysts highlight the challenge of repaying domestic debt totalling 43.43 trillion rupees, which constitutes about two-thirds of the total public debt and bears 85% of the interest burden due to high rates. The government’s sharp increase in reliance on domestic banks to fund the fiscal deficit—up 116% from 3.15 trillion rupees to 6.79 trillion rupees between July and mid-May of the previous year—poses a “systemic risk” to Pakistan’s financial stability, exacerbated by sluggish foreign inflows and below-target revenue collections.
Despite claims of being public-friendly and alleviating hardships, recent budgets influenced by IMF recommendations have severely impacted the poor and small businesses. This situation worsens when government officials dismiss criticism of the budget as routine. The current budget, however, is not routine—it is a heavy burden on the populace. The government must clarify which specific measures have been included to alleviate the common person’s plight. Instead of being investment-friendly, poverty-alleviating and promoting economic recovery, the budget appears to disproportionately burden the ordinary citizen. PM Shehbaz must explicitly outline the plans incorporated in the budget to address the struggles of the general public.
—The writer is contributing columnist, based in Turbat, Balochistan.
(gulabumid2370@gmail.com)
