BUDGET 2026-27 : Multiple risks looms over next-year budget, finance ministry warns

In a written statement of fiscal risks to parliament, required under the Public Finance Management Act 2019, Finance Minister Muhammad Aurangzeb and Finance Secretary Imdad Ullah Bosal presented these risks in seven major categories. They quantified their possible impacts on the fiscal deficit across macroeconomic, revenue, debt, state-owned entities, climate change, natural disasters, and commodity financing areas. The risk statement proposes mitigation measures to support fiscal discipline, strengthen risk management, and enhance the resilience of public finances in the event of one or more risks actually materialising. Finance ministry identified significant fiscal vulnerabilities associated with a potential rise in global oil prices, particularly in the context of the current Middle East conflict, which may likely result in a contraction of petroleum levy receipts and an increase in energy-related subsidies. “A likely decision to waive full price pass-through to domestic consumers would result in a decline in petroleum levy receipts,” it noted. To protect domestic consumers, particularly low-income households, the government would need to raise subsidies. Rising international oil prices, specifically a $40 per barrel increase, are projected to add 0.8pc of GDP to the fiscal deficit in the 2026-2027 fiscal year. Aurangzeb said a significant part of the more than 1.035 trillion rupees in special grants secured from the provinces has