The Budget Credibility Gap: An Integrated Data-Driven Fiscal Contingency Framework for Managing Macroeconomic Shocks

Mehwish Mumtaz and Ahsan ul Haq
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Mehwish Mumtaz: Pakistan Institute of Development Economics, Islamabad
Ahsan ul Haq: Pakistan Institute of Development Economics, Islamabad

No 2026:75, PIDE Policy View Point from Pakistan Institute of Development Economics

Abstract: Key Highlights Pakistan's annually budgets are immediately destroyed by external commodities shocks. This occurs as a result of policymakers setting fiscal targets based on extremely optimistic tax estimates and strict deficit limitations without allowing for any margin of error. To meet its revenue goals, the government depends on the petroleum charge and SBP profit transfers. It is incorrect to refer to this as a planned policy since it just serves to emphasize how flawed traditional tax collection is.

Pages: 8 pages
Date: 2026
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