What happened
The government and its major ally, the Pakistan Peoples Party (PPP), reached a consensus on the broad framework of the federal budget for 2026-27 during a third round of talks held at Aiwan-e-Sadr on Monday, 8 June 2026, but the budget was not presented on 10 June and was delayed again.
The meeting was chaired by President Asif Ali Zardari and attended by Prime Minister Shehbaz Sharif, PPP Chairman Bilawal Bhutto-Zardari, Deputy Prime Minister and Foreign Minister Ishaq Dar, Interior Minister Mohsin Naqvi, Finance Minister Muhammad Aurangzeb, Sindh Chief Minister Syed Murad Ali Shah, AJK Prime Minister Raja Faisal Rathore and other leaders. The Presidency said President Zardari told the prime minister that the budget should prioritise public welfare, provincial rights and economic stability, and directed that efforts be made to harmonise growth with public welfare schemes.
Parliamentary Affairs Minister Tariq Fazal Chaudhry told Arab News on Tuesday that the budget would be presented on 12 June instead of 10 June because consultations with coalition partners were continuing. The budget had already slipped from an original 5 June date to 10 June.
The delay came as differences persisted over a federal plan to retain about Rs1.2 trillion that would otherwise flow to the four provinces under the National Finance Commission (NFC) Award. Khyber-Pakhtunkhwa’s chief minister’s finance adviser, Muzzammil Aslam, said a National Economic Council (NEC) session had been postponed for a third time and that there was no agreement between the Centre and the provinces over the proposed deduction or the distribution of the federal development budget. He described the proposed shares as about Rs650 billion for Punjab, Rs300 billion for Sindh, Rs180 billion for Khyber-Pakhtunkhwa and Rs110 billion for Balochistan, down from an initial federal demand of Rs1.7 trillion.
Why it matters
The standoff goes to the constitutional machinery for sharing federal revenue. Aslam argued that the NEC could not be used to deduct provincial shares, while government sources said the Finance Ministry had raised the plan with the International Monetary Fund, which was reported to be reluctant about the NEC-based mechanism.
The money sought from the provinces was intended for defence, strategic water projects, corporate tax relief and lower withholding taxes on property transactions, according to government sources. Aslam said the Rs1.2 trillion demand was nearly half of the Rs2.2 trillion revenue shortfall the Federal Board of Revenue faced over two fiscal years, and that it would sit on top of the combined Rs1.95 trillion cash surplus the provinces had already committed under the IMF-backed fiscal framework, pushing provincial budgets into deficit.
The delay left the budget timetable uncertain even as the government tried to keep fiscal consolidation on track under its $7 billion IMF programme. Reports indicated an understanding among Punjab, Sindh and Khyber-Pakhtunkhwa to freeze development spending at current levels to create fiscal space, with Balochistan not yet on board, and that the government expected to allocate about Rs3 trillion for defence and had finalised relief for the salaried class. The episode illustrated the squeeze on Islamabad between the IMF’s consolidation demands, provincial resistance to any encroachment on their revenue, and pressure to fund both strategic spending and public relief.
Sources & reporting notes
This is a summary of published reporting, not independent reporting. Details are as carried by the cited sources, which were reviewed on 2026-06-09.
- Dawn — "Govt, PPP agree on broad budget framework"9 June 2026 · The Aiwan-e-Sadr meeting, its attendees, the agreed framework and confirmation that the budget would not be announced on 10 June.
- Arab News Pakistan — "Pakistan delays budget to June 12 as coalition partners, provinces push back on fiscal plans"9 June 2026 · The revised 12 June date, the coalition consultations and the IMF's request for additional fiscal measures.
- Pakistan Today — "Budget uncertainty grows as Centre seeks to cap provinces' NFC shares"9 June 2026 · The Rs1.2 trillion NFC demand, the provincial breakdown, the postponed NEC session and the legal objections.
