On June 10, 2025, Pakistan’s federal cabinet, chaired by Prime Minister Shehbaz Sharif, approved key Budget 2025-26 proposals, including a 10% salary increase for government employees and a 7% pension hike for retired public servants. Finalised after extensive deliberations, the decisions reflect the government’s efforts to balance economic relief with fiscal constraints. This article explores the budget’s key approvals and their broader implications.
The cabinet approved a 10% salary hike for government employees, rejecting a proposed 6% increase. Prime Minister Shehbaz Sharif emphasised the need for substantial relief amid inflation. Additionally, a 7% pension increase was greenlit to support retirees.
Finance Minister Muhammad Aurangzeb noted that the salary and pension hikes represent the maximum feasible relief, despite calls from coalition partner PPP for larger increases.
The federal cabinet, convened on Tuesday, June 10, 2025, initially approved the Budget 2025-26 in principle but continued discussions on employee salaries and other matters. The Pakistan Peoples Party (PPP), a key ally of the PML-N government, pushed for a higher salary increase to address economic pressures. However, Finance Minister Aurangzeb maintained that the approved hikes align with fiscal realities and IMF guidelines.
Read: Pakistan Economic Survey 2024-25: A Comprehensive Analysis of Economic Progress
The cabinet meeting also addressed national security, condemning India’s unilateral suspension of the Indus Waters Treaty. Prime Minister Sharif reaffirmed Pakistan’s commitment to robust defence measures. Additionally, the cabinet paid tribute to the Marka-e-Haq, honouring those who sacrificed their lives for the country’s defence.
The approved salary and pension increases aim to provide relief to public sector workers and retirees, potentially boosting consumer spending. However, the government faces challenges balancing these measures with IMF-driven fiscal discipline. The cabinet’s focus on national security underscores the budget’s broader role in addressing economic and geopolitical priorities.
Pakistan’s Budget 2025-26, approved on June 10, 2025, prioritizes economic relief through a 10% salary hike and 7% pension increase while addressing national security concerns. Led by Prime Minister Shehbaz Sharif and Finance Minister Muhammad Aurangzeb, these decisions reflect a delicate balance of domestic needs and international obligations. Further details are expected as the National Assembly reviews the budget.
