The Centre for Aerospace & Security Studies (CASS), Islamabad, organised a catalyst conversation titled ‘Fiscal Survival or Economic Reform?
Decoding Pakistan’s Budget Priorities’ on 11 June 2026.
Islamabad:The session brought together experts and researchers to examine Pakistan’s fiscal priorities and the challenges of moving from crisis management toward structural economic reform.
In his opening remarks, Air Marshal Javaid Ahmed (Retd), President CASS, noted that the budget had assumed particular importance amid global economic uncertainty, regional instability, internal political pressures, and security challenges. He stated that the budget would be crucial in determining the government’s priorities for the common citizen and Pakistan’s economic direction over the next twelve months. The session was moderated by Air Marshal Zahid Mehmood (Retd), Director at CASS, who outlined the session’s key aims.
The talk was delivered by Dr Usman Chohan, an economist and Research Fellow at the Institute of Regional Studies (IRS), Islamabad. Dr Chohan examined Pakistan’s budgetary structure and highlighted persistent fiscal constraints, including reliance on indirect taxation, non-tax revenue measures, and petroleum-related levies. He also discussed the challenge of broadening the tax base by bringing under-taxed sectors and retailers into the formal tax net.
He noted that a large share of government expenditure is absorbed by interest payments, creating a cycle of borrowing and rising debt servicing costs. While public debate often focuses on defence and administrative expenses, he stressed that Pakistan’s fiscal imbalance requires a broader examination of debt servicing, revenue generation, and expenditure priorities.
Dr Chohan also discussed federal-provincial fiscal relations, noting that large unconditional transfers to provinces place significant pressure on the federal government, while provincial revenue generation remains limited. He argued that meaningful reform would require greater provincial responsibility for revenue mobilisation, including property taxation and other local revenue measures, alongside improved accountability in provincial spending.
The discussion also covered Pakistan’s broader macroeconomic outlook. Dr Chohan observed that the country continues to face global uncertainty, energy pressures, weak investment, and dependence on remittances. He cautioned that sustainable growth would require stronger investment, improved productivity, and a shift away from repeated cycles of stabilisation.
In his concluding remarks, President CASS thanked the participants and noted that budget-making in Pakistan has traditionally focused on tax collection. He stressed that revenue generation must be supported by stronger expenditure control and rationalisation of spending priorities. While sectors such as health and education require greater attention, public spending has largely remained concentrated on hard infrastructure projects, many of which could be reviewed. He also highlighted the need to clearly define national priorities, particularly energy security, amid a volatile regional environment.
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