On debt bed, Pakistan to hike defence budget amid India's Operation Sindoor

India Today

4 days ago

Despite grappling with a deepening financial crisis that is pushing it at bailout mercies, Pakistan has confirmed that it is preparing to increase its defence spending in the next fiscal year, beginning in July. The increase is likely to be announced as the budget is presented on June 2. This comes even as Pakistan reels from military setbacks from India's Operation Sindoor, and the mini-war.advertisementThe allocation of more funds to the military comes despite Pakistan's dire economic situation. Only last week, the IMF approved a loan tranche of $1 billion (around Rs 8,500 crore). The country is burdened with over $22 billion in external debt.The IMF loan made Pakistan the fourth-largest borrower of the multilateral financial body.
Pakistan's Planning Minister, Ahsan Iqbal, on Saturday confirmed that the federal government would raise its defence budget for the upcoming 2025-26 fiscal year, citing the recent military escalation with India and New Delhi's suspension of the Indus Waters Treaty as key factors behind the decision, reported Karachi-based newspaper Dawn.He said there was no pressure from the IMF in shaping or finalising the federal budget.Iqbal's announcement came just weeks after Pakistan's federal government, led by the PML(N), reportedly approved an 18% hike in defence expenditure, raising the allocation to over Rs 2.5 trillion in the upcoming budget. It, too, cited the escalation in tensions with India as a key reason for the defence budget hike.DEFENCE SPENDING RISES EVEN AS PAKISTAN'S ECONOMY BLEEDSadvertisementThe increased defence spending amid economic fragility in Pakistan has always been the subject of debate.Pakistan's reliance on bailouts and foreign aid continues to empower its military establishment, even as critical sectors like education, healthcare, and poverty alleviation remain sidelined.This reflects a deeper paradox of elite-driven economic decision-making, where national priorities are often shaped by security concerns over social welfare, according to Soumya Bhowmick, a Fellow at the New Delhi-based Observer Research Foundation (ORF).Pakistani economic journalist Afshan Subohi, in her May 19 column in Dawn, questioned who would bear the cost of the defence hike in a cash-strapped economy. The piece was published after the federal government signalled it would raise the defence budget by 18%."The current tense regional environment likely underpins the government's proposal, endorsed by its largest coalition partner, the Pakistan Peoples' Party, to raise the defence budget by 18 per cent for the next fiscal year. The critical question for a resource-constrained country, however, remains: who will pay for it?" asked Subohi.Even in June 2024, Pakistan's defence forces got a nearly 17.6% budgetary hike, amounting to Rs 2.12 trillion (PKR)."Pakistan's tax revenues are relatively modest, but its defense spending is massive, largely because the military is the country's de facto ruler. A bankrupt Pakistan is already receiving one IMF bailout and is seeking another, yet it unveils a 17.6% rise in its big defence budget," geostrategist and academic Brahma Chellaney wrote on X in June 2024.CASH-STRAPPED PAKISTAN TO HIKE DEFENCE SPENDING AMID TENSIONS WITH INDIAadvertisementIslamabad's announcement of an increase in its defence budget follows India's Operation Sindoor, in which Indian forces targeted terror bases in Pakistan and Pakistan-occupied Kashmir (POK), after the April 22 Pahalgam attack.Operation Sindoor successfully destroyed nine terrorist camps linked to Lashkar-e-Taiba, Jaish-e-Mohammed, and Hizbul Mujahideen in Pakistan and Pakistan-occupied Kashmir, killing over 100 terrorists, including high-value targets like Yusuf Azhar and Abdul Rauf Azhar.India's advanced airpower, with precision strikes in a 25-minute operation, exposed gaps in Pakistan's air defence network.Pakistan's targeting of military and civilian areas made Indian armed forces retaliate by striking key military installations in Pakistan and cripple its air defences.Retaliating Pakistan's drone and missile attacks on Indian civilian and military infrastructure, Indian air defence systems effectively neutralised Pakistani strikes. Moreover, Indian forces hit key military infrastructure, like airbases at Noor Khan and Rahimyar Khan, where its technological superiority and strategic restraint were on display.advertisementAmid heightened military tensions in the lead-up to India's Operation Sindoor, Pakistani daily The Express Tribune reported in early May that the government was weighing additional hikes to the proposed defence budget to counter "Indian aggression" and boost investment in indigenous research and development.India, in response, raised concerns about Pakistan's fiscal priorities, with Foreign Secretary Vikram Misri urging the IMF to reconsider its bailout packages due to the potential misuse of funds for military purposes.PAK SPENDING BAILOUT MONEY ON DEFENCE AMID CASH CRUNCHPakistan's reliance on IMF bailouts, 25 loans since 1950, including four in the last five years, reveals its chronic economic instability. Pakistan's loans from the IMF alone stood at $6.2 billion as of March 31, 2025, according to the IMF.Yet, despite this cash crunch, Pakistan's civilian regime, whose reins lie in the hands of the military, is prioritising defence spending, which already accounts for nearly 18% of the federal budget.While the IMF warned that tensions with India could jeopardise Pakistan's fiscal and reform goals, Finance Minister Muhammad Aurangzeb claimed that the recent escalation with India would have "minimal fiscal impact" and could be accommodated within the current fiscal space.In choosing to prioritise defence spending amid economic freefall, Pakistan is once again leaning into its military-first doctrine, despite the long-term risks to its economic recovery and human development.Must Watch