Pakistan raises defence spending by 19% but slashes overall federal budget
In Pakistan, unlike in the case of India, pension is not part of the defence budget.
In the new budget, the defence allocation stood at 14.5% of Pakistan's total federal budget and around 2.2% of its GDP, which is projected at $411 billion (Rs 34.3 lakh crore).
New Delhi: Pakistan, which has an overall debt of USD 274 billion, Tuesday raised its defence budget by a whopping 19 percent even as it cut its overall budget by 7 percent.
Finance Minister Muhammad Aurangzeb unveiled the federal budget for fiscal year 2025–26 which stands at PKR 17.573 trillion (Rs 5.27 lakh crore), down 6.9% from the previous year.
However, Aurangzeb announced a significantly increased allocation of PKR 2.55 trillion (approx Rs 76,500 crore) for defence, up from PKR 2.12 trillion (approx Rs 63,600 crore) in the outgoing fiscal.
In FY25, Pakistan had allocated PKR 2.1 trillion (approx Rs 63,600 crore) for defence. Additionally, PKR 563 billion ($1.99 billion) was earmarked for military pensions, which are not included in the official defence budget.
The new defence allocation accounts for 14.5% of Pakistan's total federal budget and around 2.2% of its GDP, which is projected at $411 billion (Rs 34.3 lakh crore). Including military pensions, total military-related expenditure for last year stood close to PKR 2.66 trillion (Rs 79,800 crore), or about 3.2% of GDP.
In contrast, India's defence budget for 2025-2026 was marked at Rs 6.57 lakh crore, nearly nine times Pakistan's defence outlay and higher than Pakistan's entire federal budget. However, India's defence spending, which includes pensions, amounts to merely 1.9% of its GDP.
The finance minister began his address tabling the budget in the National Assembly on Tuesday by announcing: 'This budget is being presented at a historic time when the nation showed unity (and) determination,' he said, hinting at the hostilities between India-Pakistan last month.
'The spirit with which we protected our national sovereignty, we need to ensure our financial security in the same way,' the minister said, as he outlined a series of economic reforms and fiscal targets.
The country's Planning Minister, Ahsan Iqbal, had already hinted on Saturday that the government would be hiking its defence budget for the 2025-26 fiscal year.
'It is our national duty to provide the armed forces with whatever they need in this budget to bolster their capacity and defend our country in the future. It has been proven that we have a dangerous neighbour (India) who attacked us in the night, but we gave them a befitting response,' he was quoted as saying by Pakistan's Dawn.
Also read: Pakistanis unhappy with govt accepting IMF demand to liberalise economy—'it's a death warrant'
Big defence spend but slow growth and high debt
The budget was presented a day after Aurangzeb unveiled the Pakistan Economic Survey 2024–25, which showed the country's economy had grown 2.5% in FY24 and was projected to grow 2.7% in FY25. While that marks a recovery from the -0.2% contraction in 2023, the growth remains below historical averages and lower than the 3.6% initially targeted for this year.
The country's total debt now stands at PKR 76 trillion (approx $274 billion or Rs 22.89 lakh crore), of which PKR 51.5 trillion (Rs 15.45 lakh crore) was domestic and PKR 24.5 trillion (Rs 7.35 lakh crore) was sourced externally.
In nominal terms, Pakistan's economy is estimated to have grown to $411 billion (Rs 34.3 lakh crore), still far below its regional peers. Aurangzeb, however, called the upcoming fiscal year a 'turnaround story' and projected a modest but stabilising recovery.
He said global GDP growth was expected at 2.8%, placing Pakistan's outlook within a comparable international frame.
The budget comes under the watchful eyes of the International Monetary Fund (IMF), with which Pakistan remains engaged under a reform-linked bailout programme.
Amidst the 87-hour India-Pakistan conflict earlier last month, the IMF had cleared immediate disbursal of $1 billion on 9 May to Pakistan for economic reforms under a package approved last year and another $1.4 billion to reduce vulnerabilities to natural disasters.
As part of this programme, Pakistan has committed to raising revenue and cutting its fiscal deficit. Subsequently, The 2025-2026 budget has set an ambitious tax revenue target of PKR 14.131 trillion (approx Rs 4.24 lakh crore), an 8.95% increase over last year's goal. However, the Economic Survey acknowledged the challenge of meeting this target amid sluggish growth and new trade tariffs from the US, Pakistan's largest export destination.
Aurangzeb also announced on Tuesday, moves to procure cheaper energy by shutting down expensive power plants and attracting foreign investment from countries like Turkey in the oil and gas sector, underscoring Pakistan's deepening ties with Turkey.
Pakistan's Parliament will now begin debating the budget on Friday, 14 June, after a two-day recess. Discussions will continue until 21 June, followed by debate and voting on grant demands and motions on 24 and 25 June. The Finance Bill 2025 is expected to be passed on 26 June, with supplementary grants taken up the next day.
(Edited by Viny Mishra)
Also read: Pakistan's economic reforms a pushback against elite but it may backfire
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Indian Express
14 minutes ago
- Indian Express
Solution to import dependence on vegetable oil does not lie in hiking MSP
India's pulses and vegetable oil imports touched a record 7.3 million tonnes (mt) and 16.4 mt, valued at $5.5 billion and $17.3 billion respectively, in 2024-25. Some of that may have had to do with the strong El Niño-induced drought of 2023-24, whose effects on food inflation extended right up to December 2024. It forced large-scale imports — in the case of pulses, from an average of 2.6 million during 2018-19 to 2022-23 to 4.7 mt and 7.3 mt in the following two fiscals. But the same cannot be said about vegetable oil imports, which have more than doubled from 7.9 mt in 2013-14. It's quite possible that pulses imports will reduce considerably in the current fiscal, assuming a normal monsoon. But that's unlikely with vegetable oils, where rising imports have attained a structural inevitability similar to petroleum crude and natural gas. In pulses, scientists have bred shorter-duration chana (chickpea) and photo-thermo insensitive moong (green gram) varieties, enabling farmers to grow these with minimal irrigation or in all four seasons. Much of the increased domestic pulses production after 2015-16, notwithstanding the setbacks of the last two years, has been courtesy of chana and moong. It has, then, limited the need for imports mainly to arhar (pigeon-pea) and urad (black gram): In a normal year, India can produce roughly 90 per cent of its consumption requirement. Such effort has been woefully lacking in oilseeds. Take soyabean, where the average per-hectare yield in India is hardly one tonne, compared to 2.6 tonnes in Argentina and 3.4-3.5 tonnes in Brazil and the US. Not allowing genetic modification in soyabean or mustard, with potential for raising yields, hasn't helped either. It's not surprising that the import dependence in vegetable oils is well over 60 per cent — and, at the current pace, set to rise further. The solution does not lie in hiking minimum support prices (MSP). MSPs have no meaning unless accompanied by physical procurement as with rice and wheat. But even that has limitations. The latest MSP for soyabean, at Rs 5,328 per quintal or $615 per tonne, is way above the landed cost of $400-450 for the same from Brazil and the US. What the government can do is to assure oilseeds and pulses farmers of a minimum income support, while setting this at a reasonable level that incentivises them to grow and even expand acreages under these crops. But there is no substitute ultimately for increasing yields and reducing cultivation costs — which has unfortunately not happened in oilseeds, unlike with rice, wheat or sugarcane.
Scroll.in
18 minutes ago
- Scroll.in
Prajwal Bhat
Stories written by Can Zohran Mamdani, the first South Asian to run to be New York mayor, pull off an upset? He's got slick campaign videos and a progressive agenda. But can the 33-year-old politician convince voters that he's got what it takes to run the complex city? Prajwal Bhat · 20 minutes ago Firms linked to Keventer group bought electoral bonds worth Rs 600 crore while it faced ED probe This would make the Keventer group the third-largest purchaser of the bonds. Prajwal Bhat , Sachi & Project Electoral Bond · Mar 15, 2024 · 08:21 pm
Hans India
30 minutes ago
- Hans India
AP to halve logistics costs with Rs 20,000 cr infra push
Visakhapatnam: Minister for Roads and Buildings, Infrastructure and Investments BC Janardhan Reddy has underscored that the state is moving forward with a clear vision to emerge as South Asia's logistics gateway. He was speaking at the Ports and Logistics Conference, organised by the Confederation of Indian Industry in Visakhapatnam on Friday. The conference focused on unlocking the state's port potential, improving last-mile connectivity and promoting multimodal logistics integration. The Minister highlighted that Andhra Pradesh's ports now contributed over 5 per cent to the state's GSDP, supporting nearly one million jobs. Visakhapatnam Port alone handled 82.62 million tonnes in FY 2024–25, while the Krishnapatnam and Gangavaram ports together handled over 54 million tonnes, reflecting robust growth and private participation. The Minister observed that the government was investing over Rs.20,000 crore to improve connectivity through 1,040-km of new highways and major corridors like Badvel-Nellore and the VCIC rail line. 'Andhra Pradesh wants to cut logistics costs by half with Rs.20,000 crore infrastructure push,' the Minister underlined. The Chairman of Andhra Pradesh Maritime Board D, Satyanarayana, highlighted that Andhra Pradesh was strategically building a robust port-led development model with six operational ports and three new greenfield ports at Machilipatnam, Ramayapatnam, and Bhavanapadu. He shared that these were not being developed in isolation, but as part of integrated logistics and industrial corridors, fully connected through road, rail, and multimodal networks. The Chairperson of Visakhapatnam Port Authority, M Angamuthu, emphasised that Andhra Pradesh had the right foundations to emerge as a maritime entrepreneurship hub, with its strategic location, proactive governance, and well-established port network. He noted that most major ports in the state were currently operating at just 50 per cent capacity, indicating significant untapped potential. The Chairman of CII, G Murali Krishna, highlighted that ports were no longer just trade enablers but strategic national assets influencing diplomacy, jobs, and regional growth. He shared that Andhra Pradesh's balanced economy and strong policy incentives had already attracted Rs.9.2 lakh crore in investments.
