Finance minister touts proposed FY27 budget as 'significant progress' in path to economic growth

Finance Minister Muhammad Aurangzeb is currently addressing a press conference to provide further details about the proposed budget for FY26-27.

“In this budget, we have made significant progress in that direction of travel [towards economic growth] that we spoke earlier about,” he said at the outset of his media briefing in Islamabad.

The minister affirmed that the government has “made comprehensive efforts to create an enabling environment” for an export-led growth, recalling the abolishment of an advance tax.

He stressed the decision to abolish the super tax for businesses earning more than Rs500 million, terming it a “very meaningful direction of travel”.

However, upon the directives of Prime Minister Shehbaz Sharif, the minister said he proposed the abolishment of the super tax for “all exporters”.

At the same time, Aurangzeb noted the matter also pertained to “financing rather than just taxation”. He added that an additional subsidy of Rs70 billion has been proposed in the budget to take the ongoing refinancing scheme “to a different level”.

Speaking about tariffs, the minister noted that the government was in the second year of the five-year plan “in terms of bringing the cost down in terms of intermediate goods and the raw material”.

He stressed the importance of reducing the “trade deficit for goods”, adding that the services exports, particularly IT, were “becoming more and more important as we go forward”.

“This is why the government has announced to maintain the 0.25 per cent Final Tax Regime (FTR) as per the discussions that came through the IT industry, freelancers and PASHA,” he said.

Aurangzeb emphasised that the government tried to “provide relief to the lowest segments of the salaried class”, recalling that the slabs of 5pc and 15pc to 1pc and 13pc, respectively.

Speaking about the construction sector, the minister said housing and construction “play a very important role” if the budget was aimed at economic growth.

On Friday, the finance minister presented the financial plan before the National Assembly, announcing a three-year freeze on provincial transfers as the government reallocated resources for security needs and relief measures for the salaried, corporate, real estate and export sectors to revive struggling economic activity.

In his third budget — and the fifth of the major coalition partners — the minister has proposed taxes on social media earnings, a fixed tax scheme for small traders and shopkeepers, a higher minimum tax rate for wholesalers and retailers, incentives for small electric vehicles and bikes, and barriers for luxury e-vehicles.

More to follow ...