Govt likely to raise salaries, pensions in budget 2025-26

The federal cabinet on Tuesday is all set to approve the key proposals for budget 2025-26. The session chaired by PM Shehbaz Sharif will be held at 4:00 PM.

Finance Minister Muhammad Aurangzeb is scheduled to deliver the budget speech, outlining major financial plans for the upcoming year. The federal cabinet will approve the budget proposals before the official presentation. A 10% salary increase for government employees has been proposed, with pensions expected to rise between 7.5% to 10%. However, hopes of tax relief for salaried individuals are low, as the IMF opposed the current tax-free slab of Rs1.2 million. A minimum 1% tax on that income level is likely, with the exemption slab expected to remain at Rs600000. A 2.5% relief is suggested for all tax brackets.

To promote austerity, the budget includes a ban on new vehicle purchases by federal ministries and a cap on utility bills. The IMF has also advised against supplementary grants, except in case of natural disasters. Debt servicing will remain a major part of the budget, with Rs7503 billion set for domestic interest payments and Rs1119 billion for foreign debt.

On the welfare front, quarterly stipends are expected to rise to Rs13500 and further to Rs14500 in January 2026. Total federal revenue is projected at Rs19.3 trillion, while provinces will receive Rs8107 billion under the NFC award. The export target is $35.3 billion and remittances are expected to reach $39.4 billion. New initiatives include a laptop scheme and scholarships for Bangladeshi students. Tougher penalties for non-filers are also planned, including bans on vehicle purchases, property transactions, and even foreign travel except for religious pilgrimages.