Sustainable path?
THE FY27 budget is the first clear signal that the government is ready to transition from stabilisation to growth — without breaching the IMF’s macroeconomic targets. After three years of painful austerity and demand compression, the decision to reduce the super tax, introduce a real estate stimulus and offer a scattering of export incentives indicates that the government believes the worst is behind it as it cautiously proceeds to pump moderate growth of 4pc. The desperation
Pakistan's FY27 budget is the first clear indication of a government transition from economic stabilization to growth, without violating IMF macroeconomic targets. Following years of austerity, the budget includes reductions in the super tax, a stimulus for the real estate sector, and export incentives, suggesting confidence that the worst economic period has passed. Measures aim to rebuild consumption, restore private sector confidence, and stimulate economic activity. However, the chosen growth engine, real estate, is historically unreliable, potentially leading to asset inflation and diverting capital from productive investments. A major concern is the Federal Board of Revenue's ambitious revenue target despite tax rate reductions, raising questions about fiscal sustainability and potential mid-year cuts or mini-budgets. The budget's fiscal consolidation appears to rely on extracting funds from provinces rather than internal expenditure reform.
The budget's reliance on real estate for growth raises concerns about long-term economic sustainability and fiscal stability, despite its immediate appeal for stimulating activity.
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