Amid severe financial distress, Pakistan has once again placed military expenditure ahead of economic reforms. Despite inflation exceeding 38%, the government has chosen to raise its defense budget for 2025–26 by 18%, taking it past $30.12 billion. This decision comes at a time when the country is grappling with a steep trade deficit of $25 billion and possesses only three months of import cover. Additionally, Pakistan’s debt-to-GDP ratio remains around 70%, further highlighting the fragility of its financial position.
Economists have expressed serious concern over the implications of this budgetary shift. Dr. Kaiser Bengali, a noted Pakistani economist, cautioned that increasing military expenditures—while sidelining essential social spending and economic reforms—will place a heavier burden on the country’s citizens. He emphasized that resources diverted to defense and large-scale projects like the Diamer-Bhasha Dam come at the cost of programs designed to support everyday Pakistanis.
The move appears even more controversial when viewed in light of a recent U.S. intelligence report. According to the U.S. Defence Intelligence Agency’s 2025 Worldwide Threat Assessment, Pakistan is actively updating its nuclear arsenal. The report alleges that the country is procuring weapons of mass destruction-related components from international sources, primarily China, with some materials routed through third-party nations.
Despite these alarming developments, Pakistan received a much-needed financial boost earlier this month. The International Monetary Fund (IMF) approved a $1 billion disbursement under its Extended Fund Facility (EFF), a critical step toward stabilizing Pakistan’s dwindling foreign exchange reserves. However, the IMF’s decision sparked debate, especially considering India’s objections due to regional security concerns.
As Islamabad doubles down on defense amidst widespread economic distress, experts worry that the country may be sacrificing long-term sustainability for short-term geopolitical posturing. Without a decisive shift toward inclusive development and fiscal reform, Pakistan’s economic trajectory may become even more unstable.
