Pakistan has announced a major increase in defence spending for the 2026 to 2027 fiscal year, allocating PKR 3,000 billion (INR 1.03 trillion) as part of a federal budget worth PKR 18,771 billion.&nbsp;Presenting the budget in the National Assembly on Friday, Finance Minister Muhammad Aurangzeb said the government had increased defence spending in view of the current regional situation.&nbsp;"The government has made a significant increase in the defence budget," Aurangzeb said.&nbsp;The new allocation represents a 17.6 per cent increase from last year's defence budget of PKR 2,550 billion. The previous budget had also recorded a substantial rise over the year before.<h2>Government targets growth and exports</h2>Aurangzeb said the budget was designed to support economic activity, expand production and strengthen exports.&nbsp;"The budget has been prepared with a clear and purposeful strategy aimed at boosting production and exports," he said.&nbsp;"For this reason, we are giving tax concessions to large industries and are providing resources to exporters through the Export Financing Scheme."&nbsp;The finance minister also said the government wanted to improve revenue collection through stronger enforcement measures instead of placing additional tax burdens on citizens.&nbsp;"Given the uncertainty in the region and to ensure the country’s defence, a significant increase has been made in the defence budget," he added.&nbsp;Also Read: <a href="https://www.wionews.com/world/simply-baseless-iran-denies-trump-s-allegation-of-attack-on-indian-ship-in-hormuz-1781299441797">'Simply baseless': Iran denies Trump's allegation of attack on Indian ship in Hormuz</a><h2>Debt burden continues to weigh on the economy</h2>Despite the higher defence allocation, the budget also highlighted Pakistan's ongoing fiscal challenges.&nbsp;Debt servicing remains the government's biggest expenditure, with more than PKR 8 trillion allocated for interest payments. According to official figures, around PKR 70 out of every PKR 100 collected by the Federal Board of Revenue is spent on servicing debt before funds can be directed towards sectors such as health and education.&nbsp;The government has set a GDP growth target of 4 per cent for the next fiscal year, while inflation is projected to average 8.2 per cent.&nbsp;Tax revenues are expected to reach PKR 15,264 billion, while non-tax revenues are estimated at PKR 5,336 billion.

One year after Operation Sindoor, Pakistan increased defence spending by 18 per cent, allocating about 16 per cent of its federal budget to the military.

Pakistan has announced a major increase in defence spending for the 2026 to 2027 fiscal year, allocating PKR 3,000 billion (INR 1.03 trillion) as part of a federal budget worth PKR 18,771 billion. Presenting the budget in the National Assembly on Friday, Finance Minister Muhammad Aurangzeb said the government had increased defence spending in view of the current regional situation. "The government has made a significant increase in the defence budget," Aurangzeb said. The new allocation represents a 17.6 per cent increase from last year's defence budget of PKR 2,550 billion. The previous budget had also recorded a substantial rise over the year before. Government targets growth and exports Aurangzeb said the budget was designed to support economic activity, expand production and strengthen exports. "The budget has been prepared with a clear and purposeful strategy aimed at boosting production and exports," he said. "For this reason, we are giving tax concessions to large industries and are providing resources to exporters through the Export Financing Scheme." The finance minister also said the government wanted to improve revenue collection through stronger enforcement measures instead of placing additional tax burdens on citizens. "Given the uncertainty in the region and to ensure the country’s defence, a significant increase has been made in the defence budget," he added. Also Read: 'Simply baseless': Iran denies Trump's allegation of attack on Indian ship in Hormuz Debt burden continues to weigh on the economy Despite the higher defence allocation, the budget also highlighted Pakistan's ongoing fiscal challenges. Debt servicing remains the government's biggest expenditure, with more than PKR 8 trillion allocated for interest payments. According to official figures, around PKR 70 out of every PKR 100 collected by the Federal Board of Revenue is spent on servicing debt before funds can be directed towards sectors such as health and education. The government has set a GDP growth target of 4 per cent for the next fiscal year, while inflation is projected to average 8.2 per cent. Tax revenues are expected to reach PKR 15,264 billion, while non-tax revenues are estimated at PKR 5,336 billion.

One year after Operation Sindoor, Pakistan increased defence spending by 18 per cent, allocating about 16 per cent of its federal budget to the military.

Pakistan raises defence spending by 18% to PKR 3 trillion amid economic strain

Pakistan has been ranked the world's smoggiest country in 2025, with concentrations of hazardous small particles known as PM2.5 up to 13 times higher than the recommended World Health ​Organization level, according to the IQAir World Air Quality Report, cited in the Pakistan Economic Survey 2025-26. The report stated that country appeared home to four of the world’s ten most polluted cities. The report said that Faisalabad recorded the highest pollution levels nationally at 98.8 µg/m³, while 13 cities reported PM2.5 concentrations above 50 µg/m³. The survey underscored the scale of the crisis and said that the worsening air quality is driven by industrial emissions, vehicle exhaust, brick kilns and construction dust.&nbsp;&nbsp;Also Read: <a href="https://www.wionews.com/world/prioritise-wisdom-saudi-arabia-urges-return-to-diplomacy-under-pakistan-and-qatar-mediation-1781176727632">‘Prioritise wisdom’: Saudi Arabia urges return to diplomacy under Pakistan and Qatar mediation</a>&nbsp;Seasonal factors further intensify pollution, with levels spiking during dust storms in April and May and rising sharply in Karachi during November, where concentrations increased nearly 57pc compared with 2024. The human toll is severe. “Air pollution has continued to be a significant health issue affecting the population, reportedly causing almost 22,000 deaths every year and also straining ecosystems,” the survey said.&nbsp;Also Read: <a href="https://www.wionews.com/world/16-killed-over-30-injured-as-pakistani-forces-open-fire-on-protesters-in-pakistan-occupied-kashmir-1781193970614">16 killed, over 30 injured as Pakistani forces open fire on protesters in Pakistan-occupied Kashmir</a><h2>South Asia's pollution</h2>The world's top 25 ​most polluted cities were ⁠all in India, Pakistan and China. Among the countries that met the standard in 2025 were Australia, Iceland, Estonia and Panama. Laos, Cambodia and Indonesia all reported significant PM2.5 reductions compared to the previous year. Only 14 per cent of the world's cities met the WHO standard in 2025, down from 17 per cent a year earlier, ​with Canadian wildfires driving up PM2.5 across the United States and ​as far ⁠as Europe. In all, 75 countries reported lower PM2.5 levels in 2025 compared to a year ​earlier, with 54 recording higher average concentrations, IQAir said.

Pakistan ranked as the world's most polluted country in 2025, with PM2.5 levels reaching 13 times the WHO safety limit, according to the IQAir World Air Quality Report. The pollution crisis is linked to nearly 22,000 deaths annually, with Faisalabad among the country's worst-affected cities.

Pakistan has been ranked the world's smoggiest country in 2025, with concentrations of hazardous small particles known as PM2.5 up to 13 times higher than the recommended World Health Organization level, according to the IQAir World Air Quality Report, cited in the Pakistan Economic Survey 2025-26. The report stated that country appeared home to four of the world’s ten most polluted cities. The report said that Faisalabad recorded the highest pollution levels nationally at 98.8 µg/m³, while 13 cities reported PM2.5 concentrations above 50 µg/m³. The survey underscored the scale of the crisis and said that the worsening air quality is driven by industrial emissions, vehicle exhaust, brick kilns and construction dust. Also Read: ‘Prioritise wisdom’: Saudi Arabia urges return to diplomacy under Pakistan and Qatar mediation Seasonal factors further intensify pollution, with levels spiking during dust storms in April and May and rising sharply in Karachi during November, where concentrations increased nearly 57pc compared with 2024. The human toll is severe. “Air pollution has continued to be a significant health issue affecting the population, reportedly causing almost 22,000 deaths every year and also straining ecosystems,” the survey said. Also Read: 16 killed, over 30 injured as Pakistani forces open fire on protesters in Pakistan-occupied Kashmir South Asia's pollution The world's top 25 most polluted cities were ⁠all in India, Pakistan and China. Among the countries that met the standard in 2025 were Australia, Iceland, Estonia and Panama. Laos, Cambodia and Indonesia all reported significant PM2.5 reductions compared to the previous year. Only 14 per cent of the world's cities met the WHO standard in 2025, down from 17 per cent a year earlier, with Canadian wildfires driving up PM2.5 across the United States and as far ⁠as Europe. In all, 75 countries reported lower PM2.5 levels in 2025 compared to a year earlier, with 54 recording higher average concentrations, IQAir said.

Pakistan ranked as the world's most polluted country in 2025, with PM2.5 levels reaching 13 times the WHO safety limit, according to the IQAir World Air Quality Report. The pollution crisis is linked to nearly 22,000 deaths annually, with Faisalabad among the country's worst-affected cities.

13 times above WHO limit: Pakistan emerges as world's smoggiest country

Cash-strapped Pakistan's economy is in the doldrums and data from the country's economic survey a day before the country's budget proves that fact. In fact, the country's economy failed to achieve any of the targets it set out in 2022-23. Pakistan's GDP growth rate crashed to 0.3% in 2022-23.

Pakistan Economic Survey: GDP growth misses 5% target, grows by 0.3% in 2022-23

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Pakistan raises defence spending by 18% to PKR 3 trillion amid economic strain

13 times above WHO limit: Pakistan emerges as world's smoggiest country

Pakistan Economic Survey: GDP growth misses 5% target, grows by 0.3% in 2022-23