Budget FY27: Are we investing enough in the social sector?

KHADIJA HASAN The 2027 Budget for Pakistan has been announced at a critical time. Despite last year’s period of global political and economic instability, the country has undergone a phase of stabilization. The fiscal deficit reduced from 2.6% last year to 0.7% during Jul-Mar FY2026. Real GDP growth remained stable at 3.7%, compared to 2.68% the year before, and during the first nine months of FY2026, public debt growth remaineds table at 3.4%. However, geopolitical tensions in the Middle East pushed up energy and transportation costs, causing the inflation rate to plummet to 11.7%. Despite these challenges, the 2027 Budget provides a fresh economic outlook for Pakistan. In accordance with the International Monetary Fund’s Extended Fund Facility Program, the budget focuses on some of the country’s pressing structural challenges: broadening the tax base, continuing im-port tariff reforms, ands Sustaining incentives for the information technology sector. It has established strong targets, including a GDP growth rate of 4% and a revenue target of Rs. 18,186 billion. At the same time, it offers employee relief measures, including a 7% increase in government pensions and sal-aries, income tax relief across four tax slabs, and the elimination of a sur-charge on salaried individuals. However, Pakistan also continues facing challenges that compromise the socioeconomic development of its youth, comprising 2/3 of the population. Nearly 26.2 million children remain out of school, gender inequalities persist across every vital. sector of the economy, and 70 million people are living below the poverty line. Moreover, certain emerging issues became the focus of discussion this year: According to the Population Projections Report 2023-2050, Pakistan’s population is predicted to reach 289 million in 2050 under the business-as-usual scenario. Furthermore, al-though not an immediate threat to Pakistan, the West African Ebola epidemic, after being declared a Pu