Govt 'decides' to cut development budget under IMF conditions

ISLAMABAD: The federal government has decided to implement strict austerity measures in the upcoming budget to meet the International Monetary Fund’s (IMF) conditions by reducing the development budget, ARY News reported, quoting sources.

The focus will be on completing ongoing projects, with only a few new initiatives of utmost importance being included, the sources said.

They added that the Ministry of Planning has sought Rs 3 trillion from the Ministry of Finance under the development budget in the next fiscal year (2025-26).

“The Finance Ministry has not committed to providing the full amount,” the sources added.

While more than Rs 12 trillion is needed to complete the existing projects under the Public Sector Development Programme (PSDP), the government intends to set aside Rs 3 trillion for development projects.

According to Planning Commission sources, the development money for the current fiscal year might not be used to its fullest extent. In the next PSDP, finishing up current initiatives will take precedence over starting new ones.

Earlier, it was reported that Pakistan has ‘linked’ tax relief for the salaried class with the consent of the IMF in the upcoming FY2025-26 budget.

As preparations for the upcoming federal budget are underway, high-level discussions are taking place to explore avenues of tax relief, particularly for the salaried class and real estate sector.

Insiders revealed that one of the key proposals under consideration is the elimination of the 3% Federal Excise Duty (FED) on property sales.

The removal of this duty is expected to provide significant relief to the real estate sector.

For salaried individuals, the Pakistan government is exploring adjustments to income tax slabs, with a particular focus on enhancing the annual tax exemption threshold beyond the current limit of Rs600,000. However, any relief in this regard will be subject to approval from the International Monetary Fund (IMF), the sources said.