A budget of contrasts
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The Sindh government's Rs3.45 trillion budget for the upcoming fiscal year sees an almost 13% increase while increasing much-needed public spending in some areas, but at the same time, leaving unanswered questions about fiscal sustainability. Sindh has outsized significance for our economy — mostly due to the country's commercial capital, Karachi — and its budget priorities can have a major influence on economic activity in other parts of the country.
The large projected deficit — almost Rs38.5 billion — and heavy reliance on federal transfers may face complications due to Islamabad's own precarious finances. But at least the money is being spent on the right things. Over Rs523 billion has been earmarked for education, including Rs156 billion for primary education.
Health funding rises to Rs326.5 billion, some of which will help cover the construction of a new hospital in Larkana and SIUT oncology centres across the province. Poverty alleviation measures, farm subsidies and upgrades to transportation infrastructure, including Karachi's public transport system, are among the other notable spending areas.
However, some of the relief measures in the budget could prove crippling, especially the removal of several taxes and reduction in others. Federal revenues are chronically short of the target every year, leaving the province at risk of a significant shortfall. Salary and pension hikes, though necessary, also represent a large outlay.
Given Sindh's high dependence on federal transfers, the federal shortfall alone could deprive the province of enough revenue to throw a spanner into the works. But if Sindh can stimulate significant improvements without republic support, it could become a national benchmark — as long as Washington, DC and other world capitals do not treat audiences too harshly. Rational decisions are rarely enough to inspire the US to take a break.
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Express Tribune
10 hours ago
- Express Tribune
CM outlines fiscal, development agenda
Sindh Chief Minister Murad Ali Shah outlined a fiscal and development agenda for the province while highlighting serious financial challenges and federal shortfalls. Addressing a post-budget press conference on Saturday, the CM criticised the federal government for failing to meet its financial commitments, revealing that Sindh was informed just one day before the budget presentation that Rs105 billion in expected funds would be withheld. Sindh has received Rs1,478.5 billion from the divisible pool since last year, but Rs422.3 billion remains outstanding. He expressed hope that the withheld amount would be disbursed by the end of June. Despite being under an IMF programme that demands strict fiscal discipline, the Sindh government will allocate Rs590 billion for development projects this year, with a total budget of Rs3.45 trillion, Rs1 trillion for development and Rs2.15 trillion for current expenditures. Notably, Rs1.1 trillion is earmarked for salaries and pensions, leading to salary increases of 12 per cent for lower-grade employees and 10 per cent for higher grades. Sectoral budget increases include an 18 per cent rise in education funding and an 11 per cent increase in health. Funding for agriculture, irrigation, and local government projects has also seen significant boosts. Furthermore, Rs236 billion has been allocated for infrastructure projects in Karachi, including public-private partnership initiatives. CM Shah highlighted Sindh's social welfare achievements, particularly in housing for flood victims, with 500,000 homes built and another 850,000 under construction, totalling 1.3 million. To enhance rural living standards, the CM announced a Rs600-billion-project for rural water and sanitation, benefiting 4.5 million villagers. Regarding taxation, Murad noted that no new taxes were introduced in the budget, with some taxes eliminated or reduced, including the abolition of the entertainment tax and cuts to restaurant taxes. The stamp duty on third-party vehicle insurance has been reduced to Rs50, with a drop in the insurance tax from 15 per cent to five per cent. To modernise governance, the Sindh government is digitising land records through block chain for easier access. The CM claimed that free laser levellers will be provided to small farmers, with subsidies for larger ones, alongside the implementation of cluster farming technology. The CM said that improvements in education and health include the establishment of 34,000 new caste centres and expanded support for persons with disabilities. Cognitive Remediation The CM outlined the K-4 water project structure, where the federal government is responsible for sourcing water from Keenjhar Lake, while the Sindh government manages distribution and has allocated necessary funds. A total of Rs20 billion is earmarked for the K-4 feeder, alongside plans for a costly five-million-gallon desalination plant. The CM also noted 20,000 to 25,000 job vacancies in grades I to IV, with plans for recruitment via IBA-administered tests for BPS-V to VII and filling higher Grade 16 positions. The CM mentioned Sindh's conditions for supporting the federal budget, emphasising equitable distribution of development schemes and the detrimental cut of university funding from Rs4 billion to Rs2 billion, which has sparked protests. On the critical Sukkur-Hyderabad Motorway, the CM expressed concern over the halving of federal funding from Rs30 billion to Rs15 billion. The CM emphasised that major projects are not included in the Federal Public Sector Development Programme (PSDP) and criticised the 18 per cent tax on solar panels as unjust. He warned that the Pakistan Peoples Party would not support the federal budget if unresolved.
Business Recorder
16 hours ago
- Business Recorder
Post-budget press conference: Sindh CM unveils fiscal & development roadmap
KARACHI: Sindh Chief Minister Syed Murad Ali Shah on Saturday unveiled an ambitious fiscal and development roadmap for the province, reaffirming a strong commitment to social welfare, infrastructure reform, and digital progress, besides highlighting a shift towards corporate farming. At the same time, he sharply criticized the federal government for persistent financial shortfalls and what he described as discriminatory treatment towards Sindh. At the start of an extensive post-budget press conference, the Chief Minister condemned Israel's recent attack on Iran and criticized opposition lawmakers for their disruptive behaviour during the passage of a resolution against the aggression. He questioned the motives behind their resistance, accusing them of politicizing a humanitarian issue, and underscored the provincial government's firm position against terrorism. Highlighting governance continuity, he noted that the Pakistan Peoples Party has now presented its 17th consecutive provincial budget — an achievement attributed to democratic stability and consistent public service delivery. However, he delivered a sharp rebuke to the federal government for failing to honour financial commitments, revealing that Sindh was informed just a day before the budget presentation that Rs105 billion in expected transfers would be withheld. While the province has received Rs1,478.5 billion from the divisible pool since last year, a substantial Rs422.3 billion remains unpaid. He expressed cautious optimism that the outstanding amount would be cleared by the end of June. Despite the province operating under an IMF programme that enforces strict fiscal discipline, Murad announced that Sindh has allocated Rs590 billion for development spending this year. Out of the Rs3.45 trillion total budget, Rs1 trillion has been designated for development and Rs2.15 trillion for current expenditures. Of the current expenditure, Rs1.1 trillion is committed to salaries and pensions, supporting a 12 percent pay rise for lower-grade employees and a 10 percent increase for those in higher grades. Sectoral allocations have seen notable growth, including an 18 percent increase in education spending and an 11 percent boost in health. Infrastructure development in Karachi will receive Rs236 billion, with a significant share directed through public-private partnership models. Sectors such as agriculture, irrigation, and local governance have also secured sizable increases in funding. Sindh CM Murad presents Rs3.45trn provincial budget for FY2025-26 The Chief Minister drew attention to Sindh's achievements in disaster recovery, noting that 500,000 homes have already been constructed for flood victims, with another 850,000 under construction — bringing the total to 1.3 million. He said this rapid response has earned international recognition, surpassing Nepal's post-earthquake reconstruction efforts. Murad unveiled a Rs600 billion rural water and sanitation programme that will benefit 4.5 million villagers. Designed to be completed during the current government's tenure, the project will adopt a community-led model managed by NGOs. The initiative aims to reduce waterborne diseases, and PPP Chairman Bilawal Bhutto Zardari has described it as revolutionary. Turning to taxation, he confirmed that no new taxes were introduced in the budget. Several levies have either been abolished or reduced, including the entertainment tax and restaurant taxes. Stamp duty on third-party vehicle insurance has been slashed to Rs50, and the insurance tax reduced from 15 percent to 5 percent. In line with IMF requirements, a list of tax-exempt goods will soon be published. Digital governance is also on the agenda. The provincial government is piloting blockchain-based digitisation of land records in Matli and Sukkur to improve access and transparency. Free laser levellers will be distributed to small farmers, while subsidies for larger units will support the adoption of cluster farming techniques. In the social sectors, the province will establish 34,000 new caste centres and expand support for persons with disabilities. Cognitive Remediation Therapy services will be extended, and youth development centres will be set up in every district. The Sindh Institute of Child Health has launched a broad paediatric network, while the Sindh Hari Card programme has been allocated Rs8 billion for direct support to farmers. On water security, Murad offered a detailed update on the K-IV water project, clarifying that the federal government is responsible for sourcing water from Keenjhar Lake, while Sindh will handle distribution. Rs20 billion has been earmarked for the K-IV feeder infrastructure. He also announced plans for a five-million-gallon desalination plant to meet Karachi's growing water needs. Job creation remains a priority. He revealed that 20,000 to 25,000 vacancies in Grades 1 to 4 will be filled, while recruitment for Grades BPS-5 to BPS-7 will be conducted through IBA-administered exams. Senior positions in Grade 16 and above will also be filled. He expressed frustration with the federal government's development priorities, noting that only 18 of 25 Public Works Department projects were transferred to Sindh. He criticized the halving of university funding from Rs4 billion to Rs2 billion, which has triggered widespread protests. On the stalled Sukkur-Hyderabad Motorway, he noted that federal funding had been cut from Rs30 billion to Rs15 billion. While the Islamic Development Bank is supporting three sections, negotiations for international funding to complete the project are underway. Murad regretted the Centre's rejection of Sindh's offer to co-finance the project with Rs25 billion, provided the federal government matched the amount. He also condemned the 18 percent federal tax on solar panels, calling it unjustified. He reiterated that the PPP would withhold support for the federal budget if such regressive measures are not withdrawn. Sindh, in contrast, has allocated Rs25 billion for solarization under its own climate strategy, and has launched afforestation efforts to tackle environmental degradation though he acknowledged these must be scaled up. On the Safe City project, Phase-I is expected to conclude by September or October 2026. Surveillance systems are already active in key areas, including II Chundrigar Road, where security cameras are successfully identifying individuals on watch lists. Funds for Phase-II are secured for 2026 implementation. The chief minister acknowledged delays in operationalizing 150 buses in Karachi, citing funding limitations, but pointed to progress in sanitation and infrastructure development. Though digitisation of land records remains incomplete, he said blockchain-based pilots are already underway. Population growth, he argued, remains Pakistan's most serious challenge. In response, Sindh has merged the health and population welfare departments for improved coordination. Murad also criticized the federal government for failing to fund large dam projects and reaffirmed his province's alignment with the Prime Minister's position to avoid controversial water infrastructure proposals. Responding to criticism over a new helicopter and vehicles for the CM's office, he clarified that the existing helicopter is 36 years old and that the vehicles haven't been updated in years. A ban on vehicle purchases will apply in the next fiscal year as part of cost-cutting measures. On agricultural policy, he noted a shift towards corporate farming while ensuring inclusion of existing farmer networks. Murad acknowledged rising poverty in Sindh, attributing it to constraints under the IMF programme. He stressed the importance of economic growth for poverty alleviation and defended the province's approach to transparent budgeting, saying repeated attempts were made to brief the opposition. He accused opposition members of exploiting humanitarian concerns particularly the Israel resolution for political advantage and derailing efforts at constructive dialogue. He asserted that the PPP-led Sindh government will not be blackmailed by either PTI or MQM. While not a formal coalition partner at the Centre, the province successfully argued its case for long-standing under-funding, resulting in an Rs86 billion allocation to help bridge disparities with other provinces. Copyright Business Recorder, 2025
Express Tribune
18 hours ago
- Express Tribune
A budget of contrasts
Listen to article The Sindh government's Rs3.45 trillion budget for the upcoming fiscal year sees an almost 13% increase while increasing much-needed public spending in some areas, but at the same time, leaving unanswered questions about fiscal sustainability. Sindh has outsized significance for our economy — mostly due to the country's commercial capital, Karachi — and its budget priorities can have a major influence on economic activity in other parts of the country. The large projected deficit — almost Rs38.5 billion — and heavy reliance on federal transfers may face complications due to Islamabad's own precarious finances. But at least the money is being spent on the right things. Over Rs523 billion has been earmarked for education, including Rs156 billion for primary education. Health funding rises to Rs326.5 billion, some of which will help cover the construction of a new hospital in Larkana and SIUT oncology centres across the province. Poverty alleviation measures, farm subsidies and upgrades to transportation infrastructure, including Karachi's public transport system, are among the other notable spending areas. However, some of the relief measures in the budget could prove crippling, especially the removal of several taxes and reduction in others. Federal revenues are chronically short of the target every year, leaving the province at risk of a significant shortfall. Salary and pension hikes, though necessary, also represent a large outlay. Given Sindh's high dependence on federal transfers, the federal shortfall alone could deprive the province of enough revenue to throw a spanner into the works. But if Sindh can stimulate significant improvements without republic support, it could become a national benchmark — as long as Washington, DC and other world capitals do not treat audiences too harshly. Rational decisions are rarely enough to inspire the US to take a break.
