Enough Rhetoric — The 2025-26 Budget Must Break from the Past
As the 2025-26 federal budget looms, Pakistan’s finance ministry is once again making familiar promises: it will be “poor-friendly,” it will “boost the economy,” it will “widen the tax base.” We’ve heard it all before.
What we haven’t seen is real innovation, bold execution, or the fiscal courage to defy short-term political optics in favour of long-term national gain.
This year offers an opportunity — perhaps the last in a while — to do something truly transformative.
Below are six bold, practical, and overdue actions that can reposition the economy from chronic survival to sustainable growth.
1. Recover Written-Off Loans and Cut State-Owned Enterprise (SOE) Subsidies
Instead of squeezing the middle class with more taxes, why not start by recovering the billions in written-off loans by banks, particularly government-owned ones?
These are not fictional figures — such recoveries could yield hundreds of billions of rupees, instantly boosting revenue without raising taxes.
Then, cut off the lifeline of public subsidies to black-hole SOEs like PIA, Pakistan Steel, and Pakistan Railways. These entities have consumed public funds for decades with little to show for it.
Eliminating subsidies and writing off bad debts doesn’t require new legislation — it requires political will.
2. Comprehensive Tax Reform, Not Cosmetic Tweaks
Year after year, minor tweaks are made to tax slabs and withholding rules. These do little more than widen the burden on compliant taxpayers.
It’s time for a structural overhaul:
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Broaden the tax net by targeting the untaxed informal and elite sectors.
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Digitise tax administration to reduce leakages and improve compliance.
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Simplify the tax code, close loopholes, and eliminate arbitrary exemptions.
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Implement progressive taxation that targets wealth, not just income.
Pakistan doesn’t need higher taxes. It needs more people paying fair taxes.
3. Boost Productive Public Spending — Especially Infrastructure
Cutting development expenditure in the name of austerity is economic suicide. Infrastructure is the bedrock of productivity, trade, and national cohesion.
The government must:
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Invest in transportation networks, energy systems, and broadband connectivity.
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Move beyond CPEC and develop indigenous infrastructure frameworks.
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Use public-private partnerships (PPPs) to finance large-scale infrastructure without inflating debt.
Infrastructure investment isn’t charity — it’s the foundation of long-term growth and private sector confidence.
Pakistan Economy – May 2025: Inflation Rises to 3.04% YoY Amid Continued Disinflation
4. Revitalise Agriculture with Investment, Not Taxation
Agriculture employs over a third of Pakistan’s workforce. Yet instead of incentivising it, the state is fixated on taxing it.
Here’s what Pakistan should actually do:
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Modernise irrigation, fertiliser, and seed distribution systems.
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Build agri-research institutions and training centres for farmers.
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Reduce post-harvest losses with efficient supply chains and cold storage.
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Offer financing tools for small farmers and agro-enterprises.
An agriculture revolution is not just possible — it’s essential for food security, inflation control, and rural development.
5. Empower SMEs with Innovation Grants and Tax Breaks
Small and Medium Enterprises (SMEs) form the backbone of Pakistan’s economy, but they remain under-supported and over-regulated.
This year’s budget must introduce:
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Targeted tax breaks for innovation-driven and export-oriented SMEs.
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Low-interest loans, especially for startups and women-led businesses.
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Government-backed incubators, mentorship, and digital upskilling.
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Incentives for formalisation, not just penalties for non-compliance.
Support for SMEs equals mass job creation and broad-based economic resilience.
6. Invest in Tech, R&D, and Inclusive Social Protection
We can’t talk about growth in 2025 without talking about innovation and inclusion.
Pakistan must:
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Subsidise high-speed internet access in both urban and rural areas.
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Invest in digital literacy, AI research, and local tech ecosystems.
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Provide startup grants, especially in fintech, agritech, and edtech.
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Expand social safety nets like BISP to cover healthcare, education, and affordable housing.
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Make data-driven, conditional cash transfers the norm, not the exception.
Digital empowerment and inclusive policies are not luxuries — they’re preconditions for stability in the modern era.
Conclusion: Courage Over Convenience
Building a meaningful budget isn’t about playing with tax rates or rearranging subsidies. It’s about deciding what kind of country we want to be — and having the discipline to allocate resources accordingly.
True reform will upset vested interests. It will cost political capital. But doing nothing — or repeating the same tired formula — will cost the country far more.
