Structural overhaul vital to turn budget into growth engine

ISLAMABAD - The economists have raised serious reservations over the federal budget 2025–26, describing it as overly optimistic and lacking in the practical strategies required to revive the country’s struggling industrial base. While acknowledging the challenges facing the economy, industry stakeholders argue that the budget missed a critical opportunity to implement structural reforms and extend meaningful support to the real sector. They believe the budget fails to offer a viable roadmap for growth in manufacturing, job creation, and competitiveness. Rather than addressing fundamental productivity issues, the focus appears to remain on revenue collection through aggressive taxation measures. There is growing concern that the excessive reliance on indirect taxes, coupled with the absence of reforms in enforcement and documentation, may lead to harassment of compliant businesses and widen economic disparities. Financial experts pointed out that critical sectors such as manufacturing and exports continue to suffer from high input costs, especially due to elevated electricity and gas tariffs. They argued that the failure to rationalise energy prices represents a major policy shortfall, making Pakistani products uncompetitive in global markets. Valueadded industries, particularly textiles, apparel, and engineering, are reportedly under strain due to rising costs and sluggish refunds, which restrict liquidity and delay shipments. The budget’s commitments to digitalisation and tax reform were also called into question, with concerns over the absence of clear timelines, execution mechanisms, and institutional readiness. While the use of technology such as e-invoicing and POS integration was welcomed in principle, businesses warned that without adequate safeguards and simplified procedures, these measures risk becoming additional burdens rather than facilitators of compliance.