Pakistan Boosts Defence Budget by Over 20% Amidst Regional Tensions

Pakistan has revealed a considerable increase in its defence budget, allocating Rs2.55 trillion for the upcoming fiscal year (FY26), marking an increase exceeding 20%.

This budgetary augmentation occurs during a period of heightened tensions between Pakistan and India.

Finance Minister Muhammad Aurangzeb presented the federal budget 2025-26 on Tuesday, outlining a target of 4.2% growth for the next fiscal year, a step up from the anticipated 2.7% in the current FY25. The budget is aimed “for a competitive economy”.

“The nation’s defence remains our foremost concern,” Aurangzeb stated during his address, acknowledging the contribution of the country’s leadership and armed forces in addressing recent skirmishes with India.

In FY 2024-25, Pakistan had earmarked Rs2.12 trillion for defence, following a 16.4% increase to its defence budget the prior year.

During a federal cabinet meeting, Prime Minister Shehbaz Sharif commented that Pakistan is poised for advancement, citing satisfactory economic indicators.

“Having prevailed in a conventional conflict, the nation must now excel economically,” the Prime Minister remarked.

He further added, “With dedication and resolve, all objectives are attainable; collective effort is essential for progress.”

Previously, Tola Associates, a tax and consultancy firm, suggested elevating the defence budget to Rs2.8 trillion, indicating a 32% rise compared to the previous fiscal year. They attributed this to “the security situation with the neighbouring country and ongoing recruitment within the armed forces”.

Relations between Pakistan and India deteriorated following a fatal incident in Indian Illegally Occupied Jammu and Kashmir (IIOJK) last month, which New Delhi attributed to backing from Islamabad.

While Pakistan refuted involvement, intense exchanges ensued after India targeted alleged “terrorist facilities” within Pakistan. Both sides then agreed to a ceasefire.