Pakistan Unveils Rs18.77 Trillion Federal Budget for FY2026-27 with Focus on Debt Servicing and Defence
The federal government has proposed a total budget outlay of Rs18.771 trillion for fiscal year 2026-27, with debt servicing, defence spending, and social obligations accounting for the largest share of expenditures, according to the budget documents.
The budget estimates total resources of Rs18.771 trillion, matching projected expenditures and reflecting the government’s efforts to maintain fiscal balance amid ongoing economic challenges.
Revenue and Resource Mobilization
According to the budget overview, the Federal Board of Revenue (FBR) is expected to collect Rs15.264 trillion in tax revenue during FY2026-27. Non-tax revenue is projected at Rs5.336 trillion.
Gross revenue receipts are estimated at Rs20.600 trillion, while the provincial share under the National Finance Commission (NFC) award is projected at Rs8.848 trillion, leaving net revenue receipts of Rs11.751 trillion for the federal government.
The government also expects to generate Rs2.034 trillion through non-bank borrowing, including National Savings Schemes and public accounts. Net external receipts are estimated at Rs813 billion, while bank borrowing through treasury bills, Pakistan Investment Bonds (PIBs), and Sukuk is projected at Rs4.012 trillion.
Privatisation proceeds are expected to contribute Rs161 billion during the fiscal year.
Current Expenditures Dominate Budget
Current expenditures have been allocated Rs17.495 trillion, accounting for the overwhelming majority of federal spending.
Interest payments remain the single largest expenditure item at Rs8.054 trillion, highlighting the continued burden of public debt on the national exchequer.
The government has earmarked Rs3 trillion for Defence Affairs and Services, while grants and transfers will receive Rs2.680 trillion.
Other major allocations include:
• Pensions: Rs1.169 trillion
• Subsidies: Rs1.091 trillion
• Running of Civil Government: Rs1.071 trillion
• Provision for Emergencies and Others: Rs430 billion
Development Spending Set at Rs1.276 Trillion
The government has allocated Rs1.276 trillion for development and net lending.
Of this amount, Rs1 trillion has been earmarked for the Federal Public Sector Development Programme (PSDP), while Rs276 billion has been allocated for net lending.
The budget reflects the government’s continued emphasis on managing debt obligations while maintaining spending on defence, development projects, subsidies, and social commitments.
Key Budget FY2026-27 Figures (Rs Billion)
| Item | Amount |
| Total Budget Outlay | 18,771 |
| FBR Tax Revenue | 15,264 |
| Non-Tax Revenue | 5,336 |
| Interest Payments | 8,054 |
| Defence Affairs & Services | 3,000 |
| Grants & Transfers | 2,680 |
| Pension | 1,169 |
| Subsidies | 1,091 |
| Federal PSDP | 1,000 |
| Running of Civil Government | 1,071 |
The FY2026-27 budget underscores the government’s challenge of balancing fiscal consolidation with development priorities as Pakistan continues efforts to strengthen economic stability and sustain growth.
