Budget in Pakistan, constitutes a statement of government’s fiscal priorities and policy objectives for the forthcoming year. At times major policy changes are announced which include changes in tariff rates, taxes, incentives etc., that have subsequent impacts on various segments in the economy. Therefore, it generally generates a lot of debate, both within and outside the Assembly. Also, the budget is proceeded by the publication of the Pakistan Economic Survey which enables an assessment of the macro-economic performance alongwith the financial review of government revenues and expenditures presented in the budget. Social Policy and Development Centre, which focuses on policy analysis in particular social sector policy, has published a number of articles both prior to the announcement of the budget and following it. These articles relate to the state of the economy, the debt trap, the budgetary outcome for 1995-96 the options for the budget, the process of fiscal adjustment and the impact of the budget on poverty social development and the provincial finances. Moreover, an analysis of provincial resource mobilisation and expenditure priorities also is presented. This report is a compilation of these articles. We hope that our analysis will represent an objective appraisal of the economy and the Budget of 1996-97 and will be of some use to you.