PBF voices its concerns over several key aspects of budget

KARACHI: The Pakistan Business Forum (PBF) has expressed concerns over several key aspects of the Federal Budget 2026-27, stating that the budget falls short of delivering the bold and transformative measures required to accelerate industrial growth, enhance exports, revive agriculture, and generate employment opportunities. PBF President Khawaja Mehboob-ur-Rehman noted that the government has set a target of increasing petroleum levy collections by 18 percent, a move that raises concerns about continued inflationary pressures instead of providing meaningful relief to consumers and businesses. Higher petroleum-related taxation is likely to keep transportation and production costs elevated across the economy. The Forum said that the budget does not offer significant incentives capable of boosting exports and improving Pakistan’s international competitiveness. At a time when export-led growth is essential for economic stability, the absence of strong export-oriented measures represents a missed opportunity. PBF also highlighted the government’s silence on industrial energy tariffs. According to the Forum, industries operating at nearly half of their production capacity cannot be revived without substantial reductions in energy costs. “While industry was expecting a more comprehensive package to restore competitiveness and attract investment, the relief measures announced remain limited”. However, PBF welcomed the government’s decision to reduce the Super Tax by two percent and completely abolish Super Tax for businesses with annual turnover of up to Rs. 500 million. The Forum described this measure as a positive and commendable step that will provide relief to a significant segment of the business community included given relief to real estate and construction sector. The Forum also expressed concern over the continued expansion of the undocumented economy. “It noted that the size of the cash economy has reportedly increased from approximately Rs. 9 trillion to Rs. 12 trillion within a year, describing this trend as a clear indication of policy shortcomings and the failure to adequately document economic activity”. PBF further viewed the continuation of the Minimum Tax on Turnover and Alternative Minimum Tax under Section 113 of the Income Tax Ordinance 2001. The Forum maintained that these taxes impose an unfair burden on low-margin sectors, regardless of profitability, and discourage business expansion and investment. On national security, PBF acknowledged the allocation of Rs. 3 trillion for defence, stating that in the aftermath of Operation Bunyan-un-Marsoos and in view of prevailing regional security challenges, strengthening national defence preparedness and safeguarding territorial integrity are essential priorities. PBF President also expressed deep concern over the lack of meaningful support for agriculture and cotton revival. PBF stated that expectations were high that the government would announce GST reduction on cotton seed, cotton by-products, and agricultural inputs to revive cotton cultivation. Unfortunately, these expectations were not met. PBF warned that country may be forced to import nearly US$1 billion worth of cotton during the current year due to declining domestic production. The Forum further observed that achieving the national cotton production target may become increasingly challenging under current conditions. Similarly farming community had also anticipated reductions in duties and taxes on fertilisers and other agricultural inputs to lower production costs. Such measures could have enhanced agricultural productivity and contributed significantly toward GDP growth targets. However, agriculture, despite being a critical pillar of Pakistan’s economy, has once again received inadequate attention in the federal budget. According to PBF, the budget is unlikely to reduce the cost of doing business for farmers and may instead maintain existing financial pressures on the agricultural sector. Copyright Business Recorder, 2026

Read full story on Business Recorder