Islamabad, June 15, 2025 — The Sustainable Development Policy Institute (SDPI) has raised serious concerns over the far-reaching implications of the federal budget 2025-26, warning that its measures could compromise Pakistan’s economic stability, debt management, climate goals, and social protection frameworks.
At a post-budget media briefing, SDPI’s Executive Director Dr. Abid Qaiyum Suleri outlined that Pakistan faces tight fiscal space with only Rs11 trillion available amid soaring debt repayments and increasing defence requirements. He compared Pakistan’s $7 billion defence budget with India’s $80 billion, stressing that enhanced military spending, while necessary in current regional dynamics, diverts crucial funds from development sectors.
Dr. Suleri criticized the regressive taxation in the budget, particularly the imposition of 18% General Sales Tax (GST) on solar panels. He said this undermines Pakistan’s climate commitments and contradicts the introduction of a carbon levy. “Water needs the same urgency as defence,” he emphasized, pointing out underwhelming dam allocations even as the Indus Waters Treaty remains suspended.
Dr. Sajid Amin Javed, Deputy Executive Director of SDPI, said the budget focuses on satisfying IMF requirements rather than implementing meaningful reforms. With Rs600 billion in new indirect taxes, he warned that inflation will continue to burden the salaried class while powerful sectors like real estate enjoy relief. He projected a growth rate closer to 3.5–3.7% rather than the 4.2% government estimate, especially with geopolitical tensions in the Middle East affecting oil prices.
Dr. Shafqat Munir, also of SDPI, acknowledged that the budget includes climate-focused allocations—6% of the development budget and 8.6% for climate adaptation. However, he criticized the contradictory move of taxing solar panels while introducing a carbon levy. He called for investment in disaster risk reduction and anticipatory resilience, especially as international aid declines.
Dr. Fareeha Armughan, SDPI Research Fellow, lamented that less than 1% of the budget is allocated to education, with labour protections absent. She noted that the 75 million-strong industrial workforce has again been ignored.
Meanwhile, Dr. Khalid Waleed highlighted the 27% cut in WAPDA’s hydel project budget and the 57% reduction in subsidies for Balochistan’s solar tubewells. He criticized the lack of support for renewable energy and the zero tax on coal-based power, warning of long-term environmental setbacks.
SDPI experts concluded that while the budget attempts to strike a balance between relief and stabilization, it suffers from short-term thinking, policy contradictions, and neglect of crucial sectors like agriculture, education, and labour. They urged parliament to revise the proposals to ensure long-term economic and climate resilience.
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