Pakistan is expected to continue its fiscal consolidation drive in the FY27 federal budget, targeting a fourth consecutive primary surplus and stronger tax collection in line with its commitments to the International Monetary Fund (IMF).
The forecast comes in a budget preview report by brokerage Topline Securities.
What will Pakistan's FY27 budget focus on?
The government is expected to prioritize fiscal consolidation, targeting a fourth straight primary surplus in the budget expected to be announced on June 5.
The government will likely pursue tighter fiscal discipline while broadening the tax base and reducing leakages.
The IMF has raised Federal Board of Revenue (FBR) revenue targets to Quantitative Performance Criteria status, making tax commitments more stringent.
What is Pakistan's FBR tax target for FY27?
The IMF has projected FBR tax revenues at PKR 15.3 trillion for FY27. That represents a 14% increase over the revised FY26 target of PKR 13.43 trillion.
Topline warned the target could be hard to achieve. FY26 collections are expected to fall short by an additional PKR 200 billion to PKR 250 billion, despite an earlier downward revision.
Will the FY27 budget offer tax relief?
The government is considering relief for salaried individuals and the corporate sector. Measures may include income tax rate cuts, wider salary tax slabs, and rationalization of the super tax.
These steps could create an additional revenue gap exceeding PKR 200 billion. Topline estimated new taxation measures of around 0.6% of GDP, or roughly PKR 860 billion, may be needed.
The measures would be required at federal and provincial levels combined. Authorities aim to close the gap without imposing broad-based new taxes.
How will Pakistan try to raise revenue?
The federal strategy is expected to focus on improving tax enforcement, conducting audits, and targeting non-filers. Broad-based new taxes are likely to be avoided.
Measures under the FBR transformation plan may include enhanced tax audits and improved sales tax monitoring. Stronger recoveries are expected from the sugar, cement, tobacco, and fertilizer sectors.
What are growth and inflation targets for FY27?
Topline expects the government to set an FY27 GDP growth target of 4.1%. Inflation is projected at 8.5%.
The brokerage cautioned that prolonged geopolitical tensions involving Iran and elevated global oil prices could limit growth. Under that scenario, growth could slow to 3%-3.5%.
How will the budget affect Pakistan's stock market?
Topline described the budget's likely impact on the stock market as neutral in the short term. It expects a positive medium-term effect from policy continuity and macroeconomic stability.
The brokerage maintained its December 2026 target for the KSE-100 index at 203,000 points. However, sustained high oil prices could lower that target to 187,000 points.
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