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2mo ago

Pakistan Boosts Defense Budget by 20 Percent as Overall Expenditure Falls

International bailouts have stabilized Pakistan’s finances to enable a record rise in military spending.

Pakistan-made surface-to-surface missiles Fatah-I and launcher are displayed during a military parade to mark Pakistan National Day in Islamabad, Pakistan, Saturday, March 23, 2024. Pakistanis celebrated their National Day with a military parade that's showcasing nation's elite army units and high-tech weaponry, including short, medium, and long-range missiles, tanks, fighter jets and other hardware.
Pakistan scales up defence budget, but who is really fuelling it?

Overview

  • Finance Minister Muhammad Aurangzeb unveiled the FY2025-26 budget on June 10, allocating 2.55 trillion rupees ($9 billion) to defense, a 20 percent increase from the previous year.
  • Total federal spending was cut by 7 percent, with development and other sectors trimmed to accommodate the military expansion.
  • Pakistan forecasts 4.2 percent economic growth in the next fiscal year and a deficit equal to 3.9 percent of GDP, even as public debt approaches $270 billion.
  • The IMF has provided multiple bailouts, including a $7 billion loan in September 2024 and a $2.4 billion disbursement in June, stabilizing the economy for fiscal reallocation.
  • China has supplied 82 percent of Pakistan’s imported arms since 2019 and offered 40 J-35 stealth fighters along with advanced missile defense systems.