ISLAMABAD: Pakistan has hiked defense spending by 20 percent following last month’s deadly conflict with India.
The government of Prime Minister Shehbaz Sharif announced the increase as part of the budget for the fiscal year 2025-26, in which overall spending will be cut by 7 percent to 17.57 trillion rupees ($62 billion).
Finance Minister Muhammad Aurangzeb presented the budget to parliament on Tuesday evening, allocating 14 percent to the military.
It comes after Pakistan’s government announced Friday on social media that it was in discussions to acquire 40 new Chinese fighter jets and new air defense systems.
Pakistan and India were pushed to the brink of war earlier this year after a gun massacre of tourists in Indian-controlled Kashmir, marking the biggest breakdown in relations between them since 2019.
More than 70 people were killed in the four-day conflict between the nuclear-armed neighbors in May before a ceasefire was announced.
Aurangzeb said the government was allocating 2.55 trillion rupees ($9 billion) for defense compared with 2.12 trillion rupees in the previous budget.
India in February increased its defense spending by 9.5 percent to a record high of $78.8 billion for 2025-2026.
Sharif told the Cabinet: “All economic indicators are satisfactory. After defeating India in a conventional war, now we have to go beyond it in the economic field as well.”
Opposition members of the National Assembly verbally abused Aurangzeb, chanting slogans, throwing scrunched-up copies of the budget at him, whistling, and banging their desks as he gave his address.
The coming year’s defense allocation is considerably more than the government’s expenditure on higher education, agricultural development, and mitigating climate-related risks, to which Pakistan is especially prone.
Brink of default
Pakistan came to the brink of default in 2023, as a political crisis compounded an economic downturn and drove the nation’s debt burden to terminal levels, before it was saved by a $7 billion bailout from the International Monetary Fund.
It has since then enjoyed a degree of recovery, with inflation easing and foreign exchange reserves increasing.
“We have moved in the right direction,” Aurangzeb said at a briefing ahead of the budget announcement in parliament.
“Any transformation takes two to three years and we have done a good job in terms of where we wanted to take things.”
The budget will be voted on by parliament later this month, but the government’s safe majority means only minor changes are expected.
An economic survey released on Monday for the outgoing fiscal year which ends on June 30, showed that the country missed almost all the targets set at the beginning of the year, with GDP expected to grow by 2.7 percent — falling short of the initial 3.6 percent target set in the last budget.
The government has set an ambitious target of 4.2 percent GDP growth for the next fiscal year.
The budget set aside 8 trillion rupees ($28.4 billion) to service its huge amount of debt.
A World Bank report said last week that nearly 45 percent of Pakistan’s 240 million population is living below the poverty line, while the country’s literacy rate stands at 61 percent.
It is the government’s second budget since coming to power last year, in an election which saw the wildly popular leader Imran Khan jailed for charges he says were politically motivated.