PPP's Rabbani urges parties not to support budget that undermines provincial rights

Says Benazir Income Support Programme is a 'red line,' warns that any changes to it would have serious consequences

Pakistan Peoples Party (PPP) leader Raza Rabbani on Thursday said that if the federal budget undermined provincial incomes, rights or autonomy, political parties should refrain from supporting it.

“If the government insists on playing with provincial incomes, rights and autonomy, political parties should desist from supporting the budget,” Rabbani said in a statement.

The former chairman of the Senate said that any legislation affecting provincial or fiscal autonomy should not be pursued at the behest of the International Monetary Fund (IMF). He also rejected IMF-driven fiscal targets, saying that “the fixation of targets for provinces is not acceptable.”

He further said that imposing primary surplus and revenue targets would effectively reduce Parliament to approving a predetermined fiscal plan.

Highlighting social protection concerns, he described the BISP as a “red line,” warning that any changes to it would have serious consequences.

He also proposed an alternative fiscal arrangement, saying, “Or in the alternative, let all tax collection be done by the provinces and the federal government be given its share.”

A day earlier, Deputy Prime Minister Ishaq Dar announced that the Budget for the fiscal year 2026-2027 would be announced on Wednesday, June 10. The government had earlier planned to present the federal budget on June 5, but delayed the announcement after failing to resolve issues related to expenditure allocations and address concerns raised by coalition partners.

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According to government sources, the budget announcement has now been pushed to next week as the government seeks to resolve outstanding issues with the International Monetary Fund (IMF) and the PPP, whose support remains crucial for the government.

Sources said the federal government was seeking additional fiscal space of Rs1.7 trillion from the provinces, mainly Punjab and Sindh, for the next fiscal year through adjustments in the National Finance Commission award and by transferring some expenditure responsibilities.

The government has also postponed a scheduled meeting of the National Economic Council (NEC) amid unresolved issues relating to PSDP allocations, power sector subsidies, and the treatment of social safety spending under the Benazir Income Support Programme (BISP).

Among the unresolved issues are the size of the development budget for the next fiscal year and the inclusion of development schemes proposed by coalition partners.

PPP chairman Bilawal Bhutto, during the Gilgit-Baltistan election campaign, without naming any party, said some political forces called for the abolition of BISP rather than examining subsidies provided to the wealthy or the taxes paid by the business community.

The chairman had announced that the PPP would not only protect BISP but that the prime minister would announce an increase in its allocation in the upcoming budget.

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The PPP and the government have been holding regular consultations to address these matters, including resource distribution and expenditure allocations. Sources said the federal government also wanted the provinces to assume at least half of the expenditure burden of the BISP, but provincial governments were unwilling to take on the additional responsibility.

Another unresolved issue relates to the composition of the federal divisible pool to be shared between the centre and the provinces. According to government sources, the finance ministry this week sought the IMF's consent to make adjustments in major expenditure heads, just days before the budget's tentative presentation date of June 5.

The sources said the IMF was not very receptive to the government's proposals but asked it to share the proposed expenditure adjustments along with the rationale behind them.