ISLAMABAD – National Assembly Standing Committee on Finance and Revenue on Monday expressed concern over the growing burden of circular debt, the slow pace of reforms in state-owned enterprises and the rising socioeconomic pressures caused by inflation, unemployment, and poverty.
Committee Chairman Syed Naveed Qamar observed that continued reliance on indirect taxation and petroleum levies instead of sustainable tax-base expansion remains a serious concern. He made these observations while chairing a meeting of the Standing Committee on Finance and Revenue held Monday at Parliament House, Islamabad. The meeting conducted a detailed review of Pakistan’s macroeconomic outlook and fiscal priorities for Budget FY2026–27, with particular focus on emerging economic risks, IMF programme performance, and structural reform requirements.
During the briefing, the committee was informed that Pakistan remains on a “fragile stabilization path” despite signs of gradual economic recovery. GDP growth for FY2026–27 is projected between 3.5% and 4.5%, while inflation has once again entered double digits, reaching 10.9% year-on-year in April 2026. Independent experts informed the committee that Pakistan’s total foreign exchange reserves currently stand at $22.58 billion, providing approximately 2.58 months of import cover. The State Bank of Pakistan’s policy rate presently stands at 11.5%, following cumulative cuts of 1,200 basis points since June 2024. FBR tax collection in Q3 reached Rs9.304 trillion, reflecting a shortfall of Rs611 billion against targets. Pakistan’s gross public debt stands at Rs83.28 trillion, while external debt has reached $137.56 billion. Circular debt has climbed to nearly Rs5 trillion across the power and gas sectors. The trade deficit widened to $32.19 billion during July–April FY2025–26 due to weak export performance and rising imports. Meanwhile, remittance inflows remained strong at $33.86 billion during July 2025–April 2026, with projections for FY2026 estimated at $41.2 billion.
The presentation further highlighted that Pakistan sources nearly 90% of its energy imports from the Middle East, making the economy highly vulnerable to regional geopolitical instability and oil price shocks. The committee was informed that any prolonged regional conflict could significantly increase inflation, widen the current account deficit, and place renewed pressure on the exchange rate.
The chairman reiterated that the Federal Board of Revenue has consistently failed to meet collection targets despite repeated taxation measures imposed on existing taxpayers. He emphasized the urgent need for broadening the tax base through sustainable and equitable reforms instead of increasing the burden on already documented sectors of the economy. Members of the committee observed that provincial fiscal surpluses are disproportionately supporting federal IMF compliance targets. They further noted that development expenditure continues to remain compressed in favour of current expenditure and debt servicing, while Pakistan’s export sector continues to underperform compared to regional economies. The committee also emphasized that excessive taxation on digital connectivity and telecom services is restricting digital inclusion, freelancing opportunities, and broader economic participation, particularly among youth and low-income groups.
The committee stressed the need to broaden the tax base through documentation, enforcement, and administrative reforms rather than repeated tax rate increases. Members called for stronger action against illicit trade, counterfeit markets, and undocumented economic activity. The committee also highlighted the importance of increasing investment in renewable energy, climate resilience, and energy-efficiency initiatives. The committee further stressed that Budget FY2026–27 must move beyond short-term stabilization measures and instead serve as a platform for sustainable economic reform, fiscal transparency, improved governance, and inclusive growth.
