Pakistan's Upcoming Budget: A Significant Increase in Defence Spending Expected
Pakistan's Annual Budget Announcement
Islamabad: On Tuesday, Pakistan is set to reveal its federal budget for the upcoming fiscal year, which is anticipated to include a significant increase in defence spending.
The overall budget is projected to reach Rs 17.6 trillion.
Finance Minister Muhammad Aurangzeb will introduce the budget as a finance bill in the National Assembly.
The government aims for a record revenue target of nearly Rs 14 trillion for FY-2025-26, marking a 22% rise compared to the current fiscal year's estimates.
The budget aims for a GDP growth rate of 4.2% while keeping inflation at 7.5%.
The proposed tax-to-GDP ratio for FY26 is set at 12.3%, still below the 14% target, as noted by Aurangzeb on Monday.
A key focus of the budget will be the defence allocation, which is expected to receive widespread backing from lawmakers due to recent tensions with India.
Relations between India and Pakistan have soured following the Pahalgam terror attack on April 22, leading to India's precision strikes on terror sites in Pakistan and Pakistan-occupied Kashmir on May 7.
The military confrontations that ensued lasted four days, concluding with an agreement to cease hostilities after discussions between military operation directors on May 10.
While there has been no official announcement regarding the increase in defence spending, the government has indicated an 18% rise during the budget formulation.
According to reports, the Pakistan Peoples Party (PPP) and the Pakistan Muslim League-Nawaz (PML-N) have consented to an 18% increase in the defence budget, raising it to over Rs 2.5 trillion due to ongoing security concerns.
In the current fiscal year of 2024-25, the government allocated Rs 2,122 billion for defence, reflecting a 14.98% increase from the Rs 1,804 billion budgeted for 2023-24.
Defence expenditures rank as the second-largest portion of the national budget, following debt servicing, which has been allocated Rs 9,700 billion this year, making it the largest single expense.