Pakistan to announce annual budget

The Pakistan government is expected to present its 2024-25 budget today.

The budget announcement was rescheduled due to Prime Minister Shehbaz Sharif’s five-day visit to China. The budget may see a $Rs 3 trillion increase in tax, including Goods and Services Tax (GST) moving from 18% to 19%. An increase in defence spending is anticipated to curb inflation and quell general economic instability. Increased defence spending may be fueled by cross-border terrorism with India, as both nations refuse to engage in constructive dialogue to alleviate tensions. Government salaries and pensions may increase, too.

Should the budget forecasts remain accurate, expect Pakistan’s to continue reliance on Chinese investment and financial support medium-to-long-term. While this may stabilise their economy, it could also contribute to increased debt, impacting future budget decisions. This may drive Pakistani economic policy towards additional tax hikes. Expect persisting security concerns with India, leading to further budget allocation towards defence, which may further strain Pakistan’s economy. Increased austerity measures may be enforced by the International Monetary Fund, which alongside loan programs, play a key role in influencing Pakistan’s economic outlook. In the short-to-mid-term, these measures could lead to increased tax revenues and the reduction of fiscal deficits, which may impact Pakistan’s economic autonomy.