Pakistan proposes 7% pay raise for federal employees in 2026-27 budget

A 7% hike in pensions for retired government workers was also included.

ISLAMABAD: The federal government on Friday proposed a 7% salary increase for public sector employees in its budget for the 2026-27 fiscal year, according to budget documents.

A 7% hike in pensions for retired government workers was also included, along with a 10% increase in the national minimum wage.

Finance Minister Muhammad Aurangzeb unveiled the measures during his budget speech to the National Assembly, a session chaired by Speaker Ayaz Sadiq.

“This budget is being presented at a time when Pakistan has achieved the status in the eyes of its people and the world as a country whose voice is listened to, and whose friendship is desired,” Aurangzeb said on the assembly floor.

The session turned turbulent, with opposition lawmakers raising slogans as treasury members thumped desks to welcome Prime Minister Shehbaz Sharif. The PML-N-led coalition government’s spending plan now heads to parliamentary debate.

More read, Finance Minister unveils Pakistan’s FY27 budget with 4% growth goal

Earlier, Finance Minister Muhammad Aurangzeb presented Pakistan’s federal budget for fiscal year 2026-27 on Friday, targeting 4% GDP growth and projecting inflation at 8.2% as the government walks a tightrope between macroeconomic stability and rising regional tensions.

The government’s third annual budget totals approximately 18.77 trillion rupees ($67.5 billion), a modest increase from the previous year’s 17.6 trillion rupees. Debt servicing remains a substantial burden, with 8.054 trillion rupees allocated for interest payments in FY27.

According to budget documents, the government expects GDP growth of 4% in the coming fiscal year, up from an estimated 3.7% in the outgoing year. Inflation is projected at 8.2%, compared with 7% in FY26, while the budget deficit is forecast at 3.6% of GDP. The government aims to achieve a primary surplus of 2% of GDP.