With Finance Minister Muhammad Aurangzeb set to present the federal budget for fiscal year 2026–27 in the National Assembly, here is a simple guide to the key economic terms that shape the country’s financial roadmap.

Budget

The government’s annual financial plan, outlining expected income and expenditure for the year.

Financial Year

A 12-month accounting period used for budgeting and financial reporting. In Pakistan, it runs from July 1 to June 30.

Gross Domestic Product (GDP)

The total value of all goods and services produced in a country during a specific period. Most economic indicators in the budget are expressed as a percentage of GDP.

Revenue

Total income received by the government through taxes, fees, profits from state institutions, grants and other sources.

Tax Revenue

Income generated through direct and indirect taxes such as income tax, sales tax and customs duties.

Non-Tax Revenue

Income from sources other than taxes, including profits from state-owned enterprises, fees, fines and dividends.

Expenditure

Total government spending during a financial year.

Current Expenditure

Day-to-day government spending, including salaries, pensions, subsidies and debt servicing.

Development Expenditure

Spending on long-term projects aimed at economic and social development, such as infrastructure, education and healthcare.

Public Sector Development Programme (PSDP)

A government-funded development plan that finances infrastructure and major development projects.

Fiscal Deficit

The gap between total government expenditure and total revenue, excluding borrowing.

Primary Surplus / Deficit

The difference between revenue and expenditure before interest payments on debt. A surplus means revenue exceeds spending; a deficit means the opposite.

Budget Deficit

Occurs when total government spending exceeds total revenue.

Budget Surplus

When government revenue exceeds its total expenditure.

Debt Servicing

Payments made by the government to repay interest and principal on borrowed money.

Petroleum Levy

An additional charge imposed on petroleum products such as petrol and diesel. It is a government revenue source but not classified as a tax.

Tax-to-GDP Ratio

A measure of how much tax revenue the government collects relative to the size of the economy.

Debt-to-GDP Ratio

Indicates the size of total public debt compared to the country’s GDP.

Public Debt

The total amount of money the government owes, both domestically and internationally.

Subsidy

Financial assistance provided by the government to keep the cost of goods or services lower for the public.

Grant

Funds provided by governments or donors that do not need to be repaid.

Current Account Balance

The difference between a country’s earnings from exports and remittances and its payments for imports and external obligations.

Supplementary Grant

Additional funds approved during the financial year beyond the original budget.

Revised Estimates

Updated projections of revenue and expenditure during the financial year.

Budget Estimates

Initial projections of government income and spending for the upcoming financial year.