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Pakistan Raises Defence Budget 20% to $9 Billion, Cuts Other Expenditure

IMF bailouts have steadied Pakistan’s economy, enabling a substantial boost in military allocation with Chinese backing

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

  • The 2025–26 budget allocates 2.55 trillion rupees ($9 billion) to defence, a 20% increase, while overall federal spending falls by 7%.
  • Finance Minister Muhammad Aurangzeb projects 4.2% GDP growth and a 3.9% budget deficit for the next fiscal year under IMF‐mandated reforms.
  • Pakistan’s debt reached nearly 76 trillion rupees ($270 billion) in nine months, with IMF loans and Chinese debt rollovers creating fiscal space.
  • The defence surge follows an April terror attack in Jammu and Kashmir and subsequent precision strikes by India and Pakistan.
  • China remains Pakistan’s primary arms supplier, offering advanced systems including J-35 stealth fighters, AEW&C aircraft and missile-defence batteries.