The federal budget for 2025-26 has taken several measures to provide relief to Pakistan’s salaried class. An announced by Finance Minister Muhammad Aurangzeb, the budget proposes to increase 10% increment for all government employees from grade 1 to 22. This initiative addresses the ongoing inflation affecting the public sector and the rising cost of life.
The salary increase was sanctioned during a federal cabinet meeting chaired by Prime Minister Shahbaz Sharif. It is part of a broad fiscal strategy designed to reduce financial pressure on both employees and pensioners.
Main attractions of budget:
Pension hike: Retired government employees will increase their pension by 7%.
Difficulty allowance: 30% difficulty allowance for government workers deployed in remote or challenging areas, such as border areas and underdeveloped districts, has been approved.
Special relief for armed forces: Officers and soldiers will receive a special relief allowance, funded through defense budget for FY 2025-26.
Dialogue allowance for different employees: This monthly allowance has been increased from Rs 4,000, which reflects the government’s inclusion and commitment to social support.
The Finance Bill 2025–26 has also been approved, tax reforms have been introduced and more relief has been given to salaried persons. Although the complete details of tax measures have not been revealed yet, the authorities have indicated that the bill prioritizes support for citizens working.
Before finalizing the budget, the government evaluated various increment options – 6%, 10%, and 15% – together settled 10%as a balanced and durable option.
These initiatives have been introduced in response to growing public concern over rising expenses. The proposed measures now await parliamentary approval and, once passed, will come into effect with the new fiscal year.
