Finance minister highlights tax relief, concessional financing and tariff reforms as pillars of Pakistan’s growth strategy

ISLAMABAD: Federal Minister for Finance and Revenue Muhammad Aurangzeb on Saturday said the federal budget for 2026-27 marks Pakistan’s transition from economic recovery to sustainable growth, with export-led expansion and business-friendly reforms at the centre of the government’s economic agenda.

Addressing a post-budget press conference alongside Attaullah Tarar, Minister of State for Finance Bilal Azhar Kayani, senior finance officials and the chairman of the Federal Board of Revenue, Aurangzeb outlined a series of measures aimed at enhancing competitiveness, supporting exports and accelerating economic activity.

“We have moved beyond economic recovery and are now firmly on the path towards growth,” Aurangzeb said, noting that the budget translates that vision into concrete policy actions.

Export-led growth at the heart of budget strategy

The finance minister said export-led growth remains the central theme of the 2026-27 budget, with the government focusing on creating an enabling environment for exporters and businesses.

“The main theme of this budget is export-led growth,” he said. “We have made comprehensive efforts to address the factors necessary to improve export competitiveness.”

Among the key reforms announced are the abolition of advance tax and the rationalisation of super tax, measures intended to reduce the cost of doing business and improve liquidity for companies, particularly export-oriented industries.

Aurangzeb noted that the super tax rate for large businesses has been reduced from 10 per cent to 8 per cent, describing the move as a significant step towards a more growth-friendly tax regime.

He added that following consultations with the prime minister and cabinet, additional relief would also be extended to certain sub-exporters through reductions or exemptions in super tax liabilities.

Shift towards a technology-driven tax system

Highlighting broader tax reforms, the minister said the government is pursuing a modern tax operating model based on automation, artificial intelligence and reduced human interaction.

“We want to move towards a technology-driven, faceless system in income tax and sales tax, similar to what has already been introduced in customs,” he said.

According to Aurangzeb, digital monitoring and automation have already contributed to improved revenue collection and will play an increasingly important role in strengthening tax compliance and transparency.

Rs71 billion allocated for concessional export financing

The minister stressed that improving export competitiveness extends beyond taxation and requires access to affordable financing.

To support exporters, the government has allocated Rs71 billion in subsidies to maintain concessional financing at a rate of 4.5 per cent.

“This is a major feature of the budget,” Aurangzeb said. “Exporters will continue to have access to financing at 4.5 per cent despite changes in inflation and policy rates.”

He noted that the financing support programme covers lending worth trillions of rupees and is designed to strengthen Pakistan’s export sector in international markets.

Tariff reforms to lower production costs

Aurangzeb also highlighted the second phase of tariff reforms, aimed at reducing the cost of intermediate goods and raw materials used by domestic industries.

The reforms are expected to lower production costs, improve industrial competitiveness and support export-oriented manufacturing.

He said that while reducing the goods trade deficit remains a priority, the government is also placing significant emphasis on services exports, particularly the information technology sector.

“IT exports are expected to reach around $4.5 billion, and the overall outlook for goods and services exports next year is encouraging,” he added.

Positive response from business community

Reaffirming the government’s commitment to economic growth, Aurangzeb said available fiscal space has been utilised to create a pro-business environment that encourages investment, production and documentation of the economy.

“There is more to be done, but the direction of travel is clear,” he remarked. “We are steadily moving towards economic growth.”

The minister said initial feedback from business chambers and industry stakeholders has been encouraging, reflecting confidence in the government’s policy direction.

He expressed optimism that tax rationalisation, concessional financing, tariff reforms and structural improvements would collectively support sustainable economic growth.

“This budget is not just about numbers; it is about direction, continuity and confidence in Pakistan’s economic future,” Aurangzeb concluded.