&imwidth=800&imheight=600&format=webp&quality=medium "Pakistan raises defence spending by 18% to PKR 3 trillion amid economic strain")
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.
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"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.
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.
