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THE FY27 budget is the first clear signal that the government is ready to transition from stabilisation to growth — without breaching the IMF’s macroeconomic targets.
After three years of painful austerity and demand compression, the decision to reduce the super tax, introduce a real estate stimulus and offer a scattering of export incentives indicates that the government believes the worst is behind it as it cautiously proceeds to pump moderate growth of 4pc. The desperation is understandable. Stabilisation was necessary but it was never sufficient.
The relief measures are genuine: salaried workers will have more to spend, small and medium business with profits under Rs500m are freed from the super tax, exporters face lower advance minimum income tax, and the real estate and housing sectors have received a significant stimulus package. Together, these measures reveal a government attempting to rebuild consumption, restore private sector confidence and generate visible economic activity. The question, however, is not whether the direction is right. It is whether the path chosen to grow is sustainable.
Growth strategy rests on a historically unreliable foundation. The primary engine of the growth push is real estate: halved property transaction taxes, abolished deemed income tax, Rs71bn in housing subsidies, reduced construction input duties. Pakistan has deployed this lever before under Imran Khan and even earlier. The pattern is invariable: a short construction boom, speculative asset inflation, capital diverted from productive investment, then a bust lasting years. Real estate generates activity. It does not generate exports. Choosing it again is a short-term calculation dressed as growth strategy.
