Pakistan is considering a 24% increase in its defense budget for the 2025-26 financial year, raising it by Rs. 500 billion to around Rs. 2.6 trillion. The move comes as part of efforts to prepare for possible future conflicts with India.
Initially, the government had planned an 18% increase over last year’s Rs. 2.1 trillion defense allocation. But officials now believe that won’t be enough, according to a report by The Express Tribune.
The extra funds would go toward:
- Restocking military supplies
- Expanding the armed forces’ development programs beyond the current Rs. 270 billion
- Clearing outstanding military payments
Officials say this is a one-time boost aimed at strengthening the army, navy, and air force.
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The IMF has not opposed the increase, as long as Pakistan sticks to its target of a Rs. 2.2 trillion primary budget surplus, which equals 1.7% of GDP.
To cover the added cost, the Finance Ministry is looking at cutting back on non-essential subsidies. This includes over Rs. 1 trillion in power sector subsidies, despite falling electricity prices. Some subsidies in the banking sector may also be redirected. Provinces are also being asked to help fund the defense hike.
At the same time, political pressure is mounting to expand development spending. Coalition parties want the Public Sector Development Program raised from Rs. 921 billion to over Rs. 1 trillion, but the Finance Ministry wants to keep it limited so defense can remain a top priority.
With rising tensions in the region and tight finances, the government is making national security its main focus.
