There is generally a greater focus on the prospects for and likely features of the federal budget in the days before its presentation. This is increased by the lobbying, against or for, particular taxation proposals.

Undoubtedly, the macroeconomic implications of the impending federal budget are significant in terms of the impact on the rate of inflation due to higher indirect taxes, extent of ‘crowding out’ of the private sector from bank credit due to government borrowing and development impact of the spending on infrastructure projects and services.

However, there is need also to recognize that the four provincial budgets, both individually and collectively, also have important implications on economic and social development in the country.

First, as per the Constitutional allocation of services after the 18th Amendment, the provincial governments are responsible for the provision of basic social services like education, health, water supply and sanitation, and economic services like roads, bridges and highways, rural development and irrigation.

Second, the four provincial governments combined engage in much more development spending than the federal government. During the first three quarters of 2024-25, the national development expenditure was Rs 1536 billion. The share of provincial governments was as much as 80 percent.

Third, the provincial governments make a significant contribution to reducing the overall consolidated budget deficit. For example, the federal budget deficit in the period, July to March, 2024-25,........

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