ISLAMABAD: The Federal Budget 2026-27 is a planning instrument rather than something inherently good or bad, said Dr Abid Qaiyum Suleri, Executive Director of the Sustainable Development Policy Institute (SDPI), while speaking at the institute’s post-budget briefing here on Sunday.

The government has attempted to provide relief to documented sectors of the economy while maintaining fiscal discipline, he said, adding that the salaried class, information technology sector and other documented businesses have received notable incentives in the budget.

Dr Suleri, however, pointed out that the budget lacked a clear strategy for bringing the undocumented economy into the tax net and warned of practical challenges in implementing agricultural income taxation. He said relief measures were being offset through revenues generated from the petroleum levy and sales taxes.

While lauding provincial cooperation in federal fiscal arrangements, he expressed concern that a reduction in provincial development spending could affect the education, health, water and local government sectors.

He stressed the need for transparency in the Federal Board of Revenue’s (FBR) automated assessment and audit reforms, alongside robust safeguards for citizens’ data privacy.

SDPI Deputy Executive Director (Research) Dr Sajid Amin Javed said the budget remained focused on fiscal stabilisation rather than structural transformation and export-led growth.

He noted that the government’s 4pc GDP growth target appeared achievable, but much of the projected expansion was expected to come from the real estate sector, which generates limited employment and has weak linkages with construction and manufacturing.

He argued that the official inflation target of 8.2pc was underestimated, projecting inflation to remain between 11pc and 13pc due to elevated petroleum prices, a record petroleum development levy (PDL) target of Rs1.67 trillion, higher energy costs and uncertainties in global oil markets. He warned that interest rates could remain within the range of 12pc to 13pc and might rise further if global oil prices increased.

Dr Javed said the Rs15.264 trillion tax revenue target was achievable through inflation, economic growth, new taxation measures and improved compliance, but substantial gains from the retailers’ tax scheme remained elusive.

He suggested increasing the annual income tax exemption threshold for the salaried class to Rs1.2 million, providing direct support to the construction sector, reducing the highest income tax slab to 30pc, eliminating the filer and non-filer distinction, bringing all forms of income under the FBR’s income tax regime, broadening the role of the Tax Policy Office beyond revenue collection objectives and reducing reliance on petroleum levy revenues, which he described as both inflationary and a disincentive to deeper tax reforms.

SDPI Deputy Executive Director (Policy) Dr Shafqat Munir Ahmed said the budget could not be categorised entirely as a stabilisation budget, although the economy remained under the influence of the IMF programme and fiscal consolidation efforts.

He noted that the government had focused on improving tax compliance and revenue administration rather than imposing major new taxes.

While welcoming the introduction of a faceless tax system and improvements in tracking and monitoring mechanisms, he stressed the need for transparent implementation and stronger measures for financial inclusion.

Dr Munir also called for strengthening climate resilience in agriculture and better integrating social protection with disaster management systems.

SDPI Research Fellow Dr Fareeha Armughan said poverty in Pakistan had become increasingly complex due to climate risks and multidimensional deprivation.

Welcoming the 17pc increase in the Benazir Income Support Programme (BISP) budget and the plan to expand beneficiary families to 10.2 million, she said Pakistan needed to move beyond conventional cash assistance towards adaptive social protection models linked with employment generation, micro-enterprises and women’s economic empowerment.

Dr Armughan stressed the need for measures to increase female labour force participation and called for targeted support programmes for vulnerable households that fall outside traditional safety nets.

She also emphasised improved transparency, stronger accountability mechanisms and the expansion of digital payment systems.

Published in Dawn, June 15th, 2026