In a swift response to heightened military tensions with India, Pakistan has significantly increased its defense spending for the fiscal year 2025–26. Finance Minister Muhammad Aurangzeb, while unveiling the national budget, announced an allocation of $9 billion toward defense, marking a 20% rise from the previous year.
The budget presentation, delivered in the National Assembly on Tuesday, outlined a total federal outlay of $63.2 billion, with the military allocation being the second-largest expenditure item after debt repayments. The move follows India’s stealth Operation Sindoor, which targeted and disrupted Pakistan’s air defense and surveillance systems during a four-day military escalation in May.
Minister Aurangzeb confirmed the defense allocation during his speech, although, consistent with tradition, no detailed breakdown of military spending was provided. Last fiscal year, Pakistan had set aside around $7.5 billion for defense, itself a significant jump from earlier years.
Beyond military expenditures, Aurangzeb laid out a GDP growth target of 4.2%, up from the current year’s estimated 2.7%. The cost of debt servicing alone stands at over $29 billion, making it the largest single component of the budget. Other major allocations include $3.4 billion for subsidies, $3.7 billion for pensions, and $3.6 billion for public development programs. The inflation target was set at 7.5%, and the government aims to contain the fiscal deficit to 3.9%, with a stated goal of achieving a primary surplus.
The dramatic increase in defense funding comes on the heels of escalated tensions with India. The April 22 Pahalgam terror attack led to India’s precision strikes on terrorist camps in Pakistan and Pakistan-occupied Kashmir on May 7. A brief but intense military exchange followed, lasting until May 10, when both countries’ military commanders agreed to de-escalate through dialogue.
Pakistan’s budget choices clearly reflect a shift in strategic focus, with defense gaining greater prominence amid regional volatility. As geopolitical fault lines deepen, especially with India’s assertive posturing, Islamabad appears committed to ramping up military preparedness despite looming fiscal pressures.
