The Centre for Aerospace and Security Studies Islamabad hosted a discussion on Pakistan’s federal budget and fiscal reform, bringing together experts and researchers to examine the country’s economic priorities and structural challenges.

The session, titled “Fiscal Survival or Economic Reform? Decoding Pakistan’s Budget Priorities,” was held on June 11, 2026. It focused on Pakistan’s budgetary choices, fiscal constraints and the challenge of moving from short-term crisis management toward long-term economic reform.

In his opening remarks, Air Marshal Javaid Ahmed (Retd), President CASS, said the budget had gained added importance amid global economic uncertainty, regional instability, domestic political pressures and security challenges.

He said the budget would play a key role in shaping the government’s priorities for citizens and Pakistan’s economic direction over the next 12 months.

The session was moderated by Air Marshal Zahid Mehmood (Retd), Director at CASS, who introduced the discussion and outlined its main objectives.

The keynote talk was delivered by Dr Usman Chohan, economist and Research Fellow at the Institute of Regional Studies, Islamabad. He examined Pakistan’s budgetary structure and highlighted recurring fiscal challenges, including reliance on indirect taxation, non-tax revenue measures and petroleum-related levies.

Dr Chohan said broadening the tax base remained one of Pakistan’s central fiscal challenges. He said under-taxed sectors and retailers would need to be brought more effectively into the formal tax system.

He also 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 spending, Dr Chohan said Pakistan’s fiscal imbalance required a wider review of debt servicing, revenue generation and expenditure priorities.

The discussion also covered federal-provincial fiscal relations. Dr Chohan said large unconditional transfers to provinces placed pressure on the federal government, while provincial revenue generation remained limited.

He argued that meaningful fiscal reform would require greater provincial responsibility for revenue mobilisation, including property taxation and other local revenue measures, along with stronger accountability in provincial spending.

On the macroeconomic outlook, Dr Chohan said Pakistan continued to face global uncertainty, energy pressures, weak investment and dependence on remittances. He said sustainable growth would require higher investment, improved productivity and a shift away from repeated stabilisation cycles.

In his concluding remarks, Air Marshal Javaid Ahmed (Retd) said budget-making in Pakistan had traditionally focused on tax collection. He stressed that revenue generation must be supported by stronger expenditure control and rationalisation of spending priorities.

He said sectors such as health and education required greater attention, while public spending had 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, in view of the volatile regional environment.

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