Pakistan Increases Defence Allocation to Unprecedented Levels in Budget 2025-26

Strategic Insights -

The recent India-Pakistan clashes have led to a substantial increase in Pakistan's defence allocation, with Finance Minister Muhammad Aurangzeb allocating Rs 2,550 billion for defence expenditure in Budget 2025-26, a 20.2% rise from last year's defence budget. This allocation accounts for 14.5% of the Pakistan Budget and 1.97% of the country's total Gross Domestic Product. The rise has been attributed to Islamabad's preoccupation with India and the need to equip its armed forces in response to the 4-day skirmishes and terrorism in Balochistan and Khyber Pakhtunkhwa.

Key Takeaways:

  • The defence budget has increased by Rs 428 billion, or 20.2%, from last year's allocation.
  • The allocation accounts for 14.5% of the Pakistan Budget and 1.97% of the country's total Gross Domestic Product.
  • The finance minister has reduced government expenditure by 7% and capped it at Rs 17.57 trillion.
  • Rs 1,170 billion has been allocated for the Pakistan Army, Rs 520.7 billion for the Pakistan Air Force, and Rs 265.97 for the Pakistan Navy.
  • The increase in defence budget has come at a time when crores of Pakistanis are living below the poverty level, crores have no access to drinking water, and lakhs of its children are out of school.
  • The Pakistan government's public debt stands at a staggering PKR 76 trillion, with Rs 51.5 trillion in domestic debt and Rs 24.4 trillion in external liabilities.
  • The interest payments on external debt reached Rs 656 billion, equivalent to 63% of the budgeted Rs 1.04 trillion.

Statistics:

  • Pakistan's defence allocation is Rs 2,550 billion.
  • The increase in defence budget is Rs 428 billion, or 20.2% of last year's allocation.
  • The defence budget accounts for 14.5% of the Pakistan Budget.
  • The country's total Gross Domestic Product is Rs 129.76 trillion.
  • The external public debt was recorded at $87.4 billion at the end of March 2025.
  • The interest payments on external debt reached Rs 656 billion, equivalent to 63% of the budgeted Rs 1.04 trillion.

Sources:

  • Dawn: "Pakistan's total external public debt consists of two components: government external debt and debt obtained from the IMF."
  • Economic Survey 2024-25: "The public debt stands at a staggering PKR 76 trillion or about $269 billion."
  • DNA (Daily News & Analysis): "Pakistan's defence budget has increased by Rs 428 billion, or 20.2%, from last year's allocation."