Pakistan announces $62 billion budget 2025-26, raises defense spending by 20 percent to $9 billion
KARACHI: Pakistan on Tuesday announced its federal budget for fiscal year 2025-26 with a total outlay of Rs7.57 trillion ($62 billion), an overall decrease in spending by 7 percent, but hiked the defense expenditure by 20 percent following a recent military conflict with nuclear-armed neighbor India.
Finance minister Muhammad Aurangzeb presented a budget that allocated Rs2.55 trillion ($9 billion) for defense spending in FY26, compared to Rs2.12 trillion in the fiscal year ending this month.
'This budget is being presented at a very important and historic moment when the nation in recent days showed extraordinary unity, determination and strength,' Aurangzeb said, referring to the recent military confrontation with India, in which the militaries of the two nations exchanged drone, missile and artillery attacks, with a combined 70 people killed on both sides.
'With this same national unity and determination, we should turn our focus to our economic strength, growth and welfare,' the finance minister said.
'The spirit with which we protected and strengthened our national sovereignty, we need to ensure our financial security and the welfare of the people with the same unity and strength.'
The military clash between India and Pakistan was sparked by an April attack by assailants who targeted Hindu tourists in Indian Kashmir in April, killing 26 men. New Delhi blamed the attack on militants backed by Pakistan, a charge denied by Islamabad. The two sides used fighter jets, missiles, drones and artillery against each other before agreeing to a ceasefire on May 10 after four days of fighting, their worst in nearly three decades.
Here are some of the key highlights from the country's 2025-26 budget:
GDP/DEFICIT
* GDP growth projected to be 4.2 percent
* Nominal GDP seen at 129.57 trillion rupees
* Fiscal deficit expected to be 3.9 percent of GDP
* Targets primary surplus of 2.4 percent of GDP
INFLATION
* Targets inflation at 7.5 percent
EXPENDITURE
* Total spending seen at 17.57 trillion rupees
* Defense expenditure of 2.55 trillion rupees targeted
* Interest payments projected at 8.21 trillion rupees
REVENUE
* Total gross revenue of 19.28 trillion rupees targeted
* Targets total tax revenue of 14.1 trillion rupees
* Aiming for net external receipts of 106 billion rupees
($1 = 282.0000 Pakistani rupees)
- With inputs from Reuters
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