💱 THE RUPEE RATE

For every £1,000 you send home this week, your family receives approximately Rs 378,000. Rates checked 23 May 2026

📈 KSE-100 THIS WEEK

168,514 — up 2.23% on Thursday, settling into a new range between 165,000 and 170,000 after the rate hike shock of 27 April. The index is down 1.79% over the past month but remains 41.43% higher than a year ago. The market is cautious but holding — investors are waiting for the budget before making big moves.

Pakistan's budget drops on 5 June. The IMF is demanding Rs700 billion in new taxes. Here is what is actually in it - and what it means for you.

What happened

Pakistan's Federal Budget for Fiscal Year 2026-27 will be presented on 5 June 2026. An IMF mission led by Iva Petrova concluded its visit to Islamabad this week after holding detailed talks on economic developments, budget preparations and reform implementation. The conclusion of those talks was blunt: Pakistan will need to raise more than Rs700 billion in additional revenue to meet budget targets for FY2026-27.

Why it matters

This is the budget that will define economic life in Pakistan for the next 12 months. The numbers being discussed are significant. The IMF's latest staff report sets a federal revenue target of Rs17.145 trillion for FY2026-27 - a 13.5% increase, or over Rs2 trillion, from the current year. FBR tax collections are targeted at Rs15.264 trillion. To bridge the gap, authorities have committed to approximately Rs430 billion in new budgetary measures combining tax policy changes, administrative enforcement, and an 18% hike in the petroleum levy target to Rs1.73 trillion.

Where is the Rs700 billion going to come from? The IMF has asked the government to raise an additional Rs500 billion through new measures. Key proposals include full implementation of a digital invoicing system - estimated to generate Rs100 billion by reducing tax evasion - and expansion of the Sales Tax Act to cover more daily-use products including infant formula, dairy products, and cooking oil, projected to bring in another Rs100 billion. Provincial governments are separately expected to introduce new taxes worth Rs430 billion collectively.

The IMF has reaffirmed that Pakistan must achieve a primary budget surplus of 2% of GDP in FY27. It has also advised that any savings from lower interest payments be preserved rather than spent - meaning even if the SBP eventually cuts rates again, the fiscal breathing room that creates should go to deficit reduction, not new spending.

What it means for you

Three things to watch when the budget drops on 5 June.

The petroleum levy. Petroleum levy collection is expected to reach Rs1,727 billion - Rs260 billion higher than this fiscal year. If that levy rises, petrol prices go up. After the Rs135 diesel cut in April, another reversal would be painful for ordinary Pakistanis. This is the number to watch first on budget day.

Income tax. The government is reportedly leaning toward a salary freeze combined with income tax cuts rather than a direct pay increase for government employees. If income tax thresholds are raised - which aligns with the IMF's philosophy of broadening the base rather than raising rates - salaried professionals in Pakistan could see modest relief. For UK expats with family on Pakistani salaries, this matters directly.

Agricultural income tax. Discussions have focused on finally taxing agricultural income meaningfully - something the IMF has pushed for years. If implemented, it signals a genuine structural shift in Pakistan's tax base rather than another patch on existing taxpayers.

Pakistan's tech sector just posted its second-highest month on record. Freelance earnings are up 51%. This is the good news story nobody is talking about.

What happened

Pakistan's IT exports surged 33% to $423 million in April 2026 - the second-highest monthly total in the sector's history, behind only December 2025's $437 million. Full-year IT exports for FY2025-26 have reached $3.38 billion, up from $2.8 billion last year. Freelance earnings specifically climbed from $567 million to $856 million - a 51% jump in a single year.

Why it matters

Pakistan's economic story is almost always told through the lens of its problems - the IMF, the debt, the inflation, the rupee. But here is a number worth sitting with: Pakistan's IT sector barely existed as a meaningful export industry a decade ago. Software exports were under $1 billion annually as recently as 2020. They have now more than tripled in five years and are on track to exceed $4 billion this fiscal year. During the first 10 months of FY2025-26, cumulative IT and telecom export remittances reached $3.811 billion - 21% above the same period last year.

The freelance number is particularly significant. Pakistan now has the third-largest global freelancer workforce. These are young Pakistanis in Lahore, Karachi, and Islamabad earning in dollars, pounds, and euros - and converting those earnings into rupees through the banking system. Every dollar a Pakistani freelancer earns and brings home through official channels strengthens the country's foreign exchange reserves and supports the rupee. Unlike oil revenues or IMF loans, tech exports are recurring, scalable, and independent of commodity prices or geopolitical favour.

What it means for you

If you have younger family members asking what to study or which career to pursue in Pakistan, the data is unambiguous. Tech, software development, digital marketing, and AI-related skills are the sectors generating hard currency at scale. The government also incentivises this - IT exporters receive preferential tax treatment and easier access to foreign currency accounts.

For the rupee, sustained IT export growth is structurally the most positive development of the past three years. It is Pakistan's most durable source of hard currency growth and the one least vulnerable to external shocks.

$41 billion - Pakistan's projected remittances for this fiscal year, up from $38 billion last year, according to Finance Minister Muhammad Aurangzeb. Remittances make up roughly 7-8% of Pakistan's entire GDP. The money Pakistani expats send home is not a footnote - it is one of the three or four most important pillars of Pakistan's economy. Without it, the rupee would be significantly weaker and the IMF negotiations far more painful. Every transfer you make through official channels - Wise, ACE Money Transfer, your bank - counts in that $41 billion figure. You are part of what is keeping Pakistan's economy afloat.

⚡ THE QUICK THREE

🏠 EXPAT CORNER - This week’s practical tip

Remittances hit $41 billion. Are you sending money home the right way?

Since you are one of the people contributing to that $41 billion figure, it is worth making sure you are doing it efficiently. Three things that cost expats money unnecessarily.

Using your UK bank's international transfer service. High street banks typically offer GBP/PKR rates 3-5% worse than specialist providers. On a £2,000 transfer that is Rs22,000-37,000 left on the table.

Sending on a Friday afternoon. Currency markets are thinner over weekends and rates can be slightly worse. Tuesday to Thursday morning typically offers the most liquid GBP/PKR pricing.

Not using your recipient's RDA account. If your family has a Roshan Digital Account, transfers from the UK directly into an RDA are straightforward, compliant, and allow your family to hold funds in both PKR and foreign currency. If they do not have one yet, all major Pakistani banks offer RDA onboarding online from the UK.

One final note: the budget on 5 June may announce changes to withholding tax on remittances or introduce new incentives for channelling money through official routes. We will flag anything that affects you the moment it is confirmed.

Budget drops 5 June. We’ll give the full breakdown - what changed, what it means for your taxes, your family's cost of living, and the rupee. Hit reply and tell me: what do you most want explained about the budget?