Government and PPP agree to recommend June 10 for budget session for fiscal year 2026-27

The government and its coalition partner, the Pakistan People’s Party (PPP), agreed on Wednesday to recommend to Prime Minister Shehbaz Sharif that the federal budget for the 2026-27 fiscal year be presented on June 10.

According to a statement issued by the Deputy Prime Minister’s Office, Foreign Minister Ishaq Dar and Finance Minister Muhammad Aurangzeb held a meeting with senior PPP leaders to discuss pre-budget consultations ahead of the federal budget.

The statement said the discussions focused on current spending and development spending priorities, including the Public Sector Development Program (PSDP), as well as broader economic priorities such as fiscal sustainability, public welfare measures, development initiatives and inclusive growth for the financial year 2026-27.

“It was unanimously agreed to recommend to Prime Minister Muhammad Shehbaz Sharif that the budget for the financial year 2026-2027 be announced on Wednesday, June 10, 2026,” the statement said.

The meeting was attended by Sindh Chief Minister Syed Murad Ali Shah, MP Syed Naveed Qamar, Senator Sherry Rehman, Senator Saleem Mandviwala, Sindh Irrigation Minister Jam Khan Shoro, Minister of State for Finance and Railways Bilal Azhar Kayani, Special Assistant to the Prime Minister Tariq Bajwa, Federal Secretary Finance Imdadullah Bosal, Chairman of the Federal Board of Revenue Rashid Mahmood Langrial and other senior officials of relevant ministries and departments.

The government had initially planned to present the federal budget on June 5, but delayed the announcement after failing to resolve issues surrounding spending allocation and address concerns raised by coalition partners.

According to government sources, the budget announcement has been pushed back to next week as the government seeks to resolve outstanding issues with the International Monetary Fund (IMF) and the PPP, whose support remains crucial for the government.

Sources said the federal government was seeking additional fiscal space of Rs 1.7 trillion from provinces, mainly Punjab and Sindh, for the next financial year by adjusting National Finance Commission allocations and transferring some spending responsibilities.

The government also postponed a scheduled meeting of the National Economic Council (NEC) due to unresolved issues related to PSDP allocations, power sector subsidies and processing of social security expenditure under the Benazir Income Support Program (BISP).

The NEC meeting, initially scheduled for Wednesday, was expected to approve the national development budget for the Center and the four provinces, as well as macroeconomic targets for the next fiscal year. The meeting, which will be chaired by Prime Minister Shehbaz and attended by provincial chief ministers, is now expected to be held on Thursday or Friday.

Unresolved issues include the size of the development budget for the next fiscal year and the inclusion of development projects proposed by coalition partners.

The PPP and the government have held regular consultations to resolve these issues, including resource distribution and expenditure allocation.

Sources said the federal government also wanted provinces to shoulder at least half of the BISP expenditure burden, but provincial governments were not willing to take on this additional responsibility.

Another unresolved question concerns the composition of the divisible federal pool which will be shared between the Center and the provinces.

According to government sources, the Finance Ministry this week requested IMF approval to make adjustments in key spending items, just days before the provisional budget presentation date of June 5.

The sources said the IMF was not very receptive to the government’s proposals, but asked it to share the proposed spending adjustments as well as the rationale behind them.