The federal government is expected to present a Rs17.68 trillion budget for the 2025-26 fiscal year on June 10, according to the report, citing well-placed sources.
One of the key factors influencing the new budget is the anticipated drop in the policy rate, which could lower interest and loan payment costs by around Rs1,300 billion.
This would help reduce the overall budget size by Rs900 billion compared to last year’s Rs18.7 trillion allocation.
The upcoming financial plan is set to focus heavily on cost-cutting. In line with this, the government is planning to ban the purchase of new vehicles across all federal departments and ministries, while also encouraging reduced electricity and gas consumption.
In compliance with IMF conditions, a strict ban will be imposed on non-essential supplementary grants. Only emergency funds for natural disasters will be considered.
Projections show that Rs8,685 billion will be earmarked for loan interest payments, Rs7,503 billion for domestic debt, and Rs1,119 billion for foreign debt servicing.
The government also plans to allocate Rs1,367 billion in subsidies and Rs1,619 billion in various grants.
The estimated budget deficit stands at Rs6,632 billion, with the federal government expecting a Rs1,220 billion surplus from provincial contributions to help bridge the gap.
As part of its social welfare commitments, the government is likely to allocate Rs716 billion to the Benazir Income Support Programme, with a proposed increase in the quarterly cash stipend from Rs13,500 to Rs14,500 starting January 2026.