On Wednesday, Pakistan Finance Minister Muhammad Aurangzeb provided an post-budget press conference where he stressed the significance of customs duties reform to its ambition of transitioning towards an export-driven economy. Speaking a day after unveiling the federal budget for FY 2025-26, Aurangzeb dubbed these reforms “most significant” since 30 years, noting they could help lower production costs, increase competitiveness and facilitate long-term growth.
Aurangzeb Unveils Tariff Cuts as a Structural Shift
Aurangzeb announced that additional customs duties have been eliminated on 4,000 of 7,000 tariff lines and base duties reduced on 2,700 more, of which 2,000 directly relate to materials used by exporters (24newshd.tv + 6 | Arabnews.com + DailyTimes.com.pk).
He defended the move despite concerns of potential revenue loss by noting how export-led growth stimulus will eventually offset any short-term fiscal impact and help avoid balance-of-payments crises; see dawn.com +6 for details or 24newshd.tv +6.
“Pakistan is experiencing an East Asia moment,” Aurangzeb declared, as they alter the economy’s DNA to allow sustained growth without further external crises. [[tribune.com.pk], arabnews.com, dawn.com and +9 all published articles concerning these policies] (tribune.com.pk | arabnews | dawn.com | +9)].
He noted that although revenues might initially decrease due to this move, its long-term gains for exporters and the economy will justify its implementation (reuters.com; arabnews.com +10; dawn.com+10)
Broader Budget Context
This year’s 17.57 trillion rupee budget sets an ambitious growth target of 4.2% of gross domestic product, up significantly from 2.7% last year, as well as an objective to reduce fiscal deficit from 5.9% of GDP down to 3.9% (in accordance with IMF recommendations). (Sources: Brecorder.com and Reuter’s.com for further detail.). Arabnews also reports on these plans (source).
Relief measures included reduced income tax rates–2.5% on salaries between Rs600,000 and Rs1.2 million–and a modest 0.5% decrease in corporate “super tax”, both according to Brecorder and Islamabadpost websites respectively (+1).
Reacting to shocking omissions – such as failing to provide their customary technical briefing – journalists began an initial walkout before Aurangzeb resumed once Finance Secretary and FBR Chairman joined him ( dawn.com +5 = Tribune +5)
Budget 2020 Aims at Promoting Industry and Agriculture In addition to tariff reductions, the budget provides for an expansion in SME financing by setting an ambitious target of Rs1.1 trillion disbursed across 750,000 firms by 2028–more than double current levels, according to dawn.com/tribune.pk +4.
Aurangzeb confirmed no new taxes would be imposed on fertilizers and pesticides – key inputs for farmers – after reaching an agreement with the IMF (24newshd.tv/news, dawn.com/news, dailytimes.com.pk/news).
He noted that mortgage finance would be incentivized and middlemen marginalized in order to increase small farmer incomes – all measures that form part of the budget’s twofold goal: expanding production while simultaneously diversifying and broadening its tax base.
Aurangzeb underscored fiscal discipline and structural reform with her focus on enforcement of existing tax laws; over Rs400 billion was collected last year alone! Plans to tighten leakages further were also put forth.
He defended higher spending on defence and salaries as overdue corrections; yet promised future budgets would prioritize fiscal restraint.
He highlighted inflation benchmarks for pensions and salaries and proposed that Pakistan issue its inaugural Panda bond (yuan-denominated sovereign issue) by 2026 when its credit ratings allow.
Cutting tariffs on over 4,000 lines is a significant move to lower export costs and make Pakistani goods more globally competitive.
Fiscal trade-off: short-term revenue loss could occur, but sustained growth may make up the difference.
Cross-sector Support: the budget offers cross-sectoral assistance through tariff reform, SME financing, agriculture support and mortgage incentives.
Enforcement & Governance: Recovering Rs400 Bn in Tax Leakage Demonstrates Progress to Enhance Compliance.
Pakistan has recently implemented an ambitious package–anchored by tariff liberalization–to shift away from consumption-led growth to an investment and export model. Success for this initiative depends on enforcement follow through, global market access, and whether businesses can quickly take advantage of newly open spectrum.