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Business Recorder
14-06-2025
- Business
- Business Recorder
Opposition leader hails 20pc defence budget hike
ISLAMABAD: Opposition Leader Omar Ayub tore into the federal budget for 2025-26 on Friday, calling it a 'disaster' and 'Leila' budget – but gave a full-throated thumbs-up to the 20 per cent defence budget hike (minus military pensions), citing last month's tense showdown with India. Opening the budget debate in the National Assembly, Ayub called the government's fiscal plan a 'Leila budget' – a term he used to suggest it was 'an illusion' – and accused the administration of presenting manipulated figures to mask economic deterioration. Despite his criticism, Ayub endorsed the 20 per cent increase in the defence budget, including the Rs742 billion allocated for military pensions, bringing the total defence outlay to Rs3.292 trillion. He described the hike as 'totally justified' in light of recent border tensions and national security concerns. He dismissed the government's reported 2.7 per cent GDP growth rate as 'fudged', citing figures from the Economic Survey of Pakistan that showed agricultural growth at just 0.6 per cent and industrial growth at -0.5 per cent. He argued that large-scale manufacturing had contracted more sharply than officially acknowledged. He was also sceptical of livestock statistics, mocking a reported increase of 360,000 animals, including a rise of 100,000 donkeys, without a matching surge in mules. 'Where are the mules,' he quipped. The opposition leader questioned the government's claim of a 23.7 per cent growth in the IT sector, suggesting that large industrialists had set up IT firms to exploit tax loopholes, while genuine technology companies were relocating abroad due to what he described as punitive tax measures. Ayub painted a bleak picture of living standards, asserting that the proportion of Pakistanis living below the poverty line had climbed from 35 per cent to 45 per cent, with nearly 30 million people now classified as poor. He said purchasing power had collapsed, noting that someone earning Rs50,000 in 2022 now effectively had the spending capacity of just Rs22,000. Citing official statistics, he said wheat prices had surged by 50 per cent in three years, and 80 per cent of the planning budget remained unused or had lapsed. The opposition leader criticised the government's decision to cut the Public Sector Development Programme (PSDP) budget from Rs1,400 billion to Rs1,100 billion, calling it a sign of weak governance. He also pointed out that Rs8.207 trillion – nearly half of the Rs17.573 trillion budget – was earmarked for interest payments. He said this allocation underscored the government's misplaced priorities and undermined its claims of being pro-people. Ayub accused the government of imposing heavy burdens on consumers, pointing to the hike in the petroleum development levy (PDL), which now stands at Rs100 per litre, compared with Rs20 during former prime minister Imran Khan's tenure. He alleged a sharp rise in oil smuggling from Iran, claiming that around 2.17 billion litres of fuel – worth Rs550 billion – enter Pakistan illegally each year, resulting in an annual loss of Rs173 billion in PDL revenue. He said the chairman of the Federal Board of Revenue (FBR), Rashid Mahmood Langrial, had admitted this issue during a parliamentary committee meeting. While global oil prices were hovering around $64 per barrel, domestic petrol prices had jumped by roughly 70 per cent, from Rs149 to Rs253 per litre, Ayub said. He also raised concerns about a 24 per cent decline in energy consumption, attributing it to prohibitively high electricity tariffs. He condemned new taxes on solar panels and criticised rising capacity payments, which he said had soared by 375 per cent under the current government. The Special Investment Facilitation Council (SIFC), a military-backed initiative aimed at attracting foreign investment, also came under fire. Ayub questioned the competence of its members and called on the government to disclose their educational qualifications to assess their suitability. While acknowledging marginal progress in export performance, Ayub concluded by urging a revision of the National Finance Commission (NFC) Award to ensure a more equitable distribution of resources among Pakistan's provinces. Taking part in the debate, Raja Pervaiz Ashraf of the Pakistan People's Party (PPP) acknowledged that the current administration had made politically unpopular decisions in an effort to stabilise the economy. 'These actions must be recognised,' he said, drawing a parallel to Pakistan's historical resilience. 'If we can win a war in four days, we can also fix our fragile economy – if we stand united.' Ashraf defended the budget as appropriate given the prevailing economic conditions and praised Prime Minister Shehbaz Sharif for what he described as courageous leadership. 'The prime minister has sacrificed his political capital for the sake of the country,' he said, adding that borrowing from international institutions is a necessity for all governments, regardless of party affiliation. The Minister for Parliamentary Affairs, Tariq Fazal Chaudhary, echoed the emphasis on economic reform, stating that the government is prioritising the creation of a favourable investment climate. 'We are implementing reforms across sectors to place the country on the path to sustainable development,' he added. He said that the budget includes specific measures aimed at the development of Balochistan and assured the house that constructive suggestions from both government and opposition members would be considered. Several parliamentarians, including Syed Hafeezuddin, Samina Khalid, Jamshed Dasti, Sheikh Aftab Ahmad, Syed Waseem Hussain, Yousaf Khan and Shahida Rehmani, took part in the ongoing budget debate. While government allies praised the administration's management of a fragile economy amid political uncertainty, opposition members accused Prime Minister Sharif's government of following International Monetary Fund (IMF) directives at the expense of the poor, criticising what they described as the continuation of a 'Form 47-installed regime'. Copyright Business Recorder, 2025
Express Tribune
11-06-2025
- Business
- Express Tribune
21% hike in defence budget
In response to mounting security threats and recent military escalation with India, the federal government on Tuesday proposed a substantial 21 per cent increase in the defence budget for the fiscal year 2025-26 – a move that garnered cross-party support. The proposed allocation of Rs2,550 billion marks a sharp rise from the outgoing fiscal year's original defence budget of Rs2,128 billion. The revised figure for the current year stands at Rs2,181 billion, reflecting the financial strain of last month's four-day military standoff with India, during which both countries exchanged missiles and drones for the first time since becoming nuclear powers. The increase in Pakistan's defence spending this year outpaces the average annual rise of 1015 per cent seen in recent years, driven largely by what officials term a "radically altered regional security environment". India's 2025-26 defence budget has been set at $78.7 billion — a 9.5 per cent increase — with $21 billion earmarked for the procurement of new military equipment. According to the budget documents, Pakistan's defence expenditure as a percentage of GDP will rise to 1.97 per cent, up from last year's 1.71 per cent. The figures exclude Rs742 billion allocated for pensions of retired military personnel and Rs300 billion for the Armed Forces Development Programme. A breakdown of the proposed Rs2,550 billion allocation shows: Rs846 billion set aside for salaries and employee-related expenses; Rs704 billion for operating expenses; Rs663 billion for procurement of arms, ammunition and related equipment — both domestic and imported — and Rs336 billion for civil works and infrastructure development. While all three services — the army, navy, and air force — will receive budgetary increases, the Pakistan Army continues to command the largest share due to its size and operational responsibilities. The budget hike comes in the wake of unprecedented hostilities last month, triggered by India's allegations that Pakistan was behind the Pahalgam attack. Pakistan categorically denied any involvement. The two countries exchanged drones and missiles before agreeing to a US-brokered ceasefire on May 10, which held despite India later rejecting Washington's mediation and insisting its military campaign — dubbed "Operation Sindoor" — was merely paused. During the conflict, Pakistan downed six Indian fighter jets and one UAV. Islamabad has since warned that any future violation of its sovereignty would be met with a swift and forceful response. India, under Prime Minister Narendra Modi, has adopted a more aggressive posture, declaring that any future attack could be treated as an act of war. Defence analysts argue that the strategic landscape has changed. With India effectively lowering the threshold for conflict, Pakistan's defence planners are increasingly focused on acquiring next-generation technologies, including fifth-generation fighter jets from China, advanced drones and cyber warfare capabilities. In past years, debates over balancing defence spending with development priorities were common. However, in the current context of heightened military alert and geopolitical uncertainty, the latest budget has drawn little public criticism. Experts warn that absent a credible peace process and sustained diplomatic engagement, the region risks being caught in a costly and dangerous arms race.
