ISLAMABAD – Major Defence spending boost in Pakistan’s upcoming Budget is on the cards as the country is facing hostility with India after recent misadventure of Modi-led government.
After unprecedented clashes between the two sides, the Pakistani government is reportedly planning a big increase in defence spending. A tax consultancy firm hinted at surge in the defence budget to Rs2.8 trillion, which is one third increase compared to last year.
As the South Asian nation earlier planned a defence allocation Rs2.12 trillion, actual spending until March 2025 stood at Rs1.4trillion. Amid cthe urrent security environment, defence expenditure could go up to Rs2.4 trillion by June.
The firm stressed higher defence spending for the recruitment of additional armed forces personnel. It also mentioned Budget 2025-26 as vital opportunity to steer country’s economy toward steady growth. It projects total budget expenditure for FY26 at Rs17.2 trillion, lower than Rs18.9 trillion budgeted for FY25.
Pakistan Budget 2025-26
Pakistani government is expected to roll out Rs16.9 trillion budget for the fiscal year 2025–26, showing a 10.6pc or Rs2 trillion reduction from the current FY, driven mainly by lower debt servicing costs.
The drop in interest payments comes after a major cut in the central bank’s policy rate from 22% to 11%. Budget 2025-26 is scheduled for release on June 10, targeting a fiscal deficit of Rs6.2 trillion and revenue collection of Rs17.8 trillion. Key proposed measures include new taxes on retailers, GST on petroleum products, and the removal of regional tax exemptions.
The economy is projected to grow by 3.6% with inflation at 6.29%. The current account is forecast to swing to a $1.5 billion deficit after a surplus this year.
