Pakistan has announced a substantial increase of over 20% in its defence budget for the upcoming fiscal year 2025–26, allocating Rs2.55 trillion—up from Rs2.12 trillion last year. This significant rise in military spending comes at a time when tensions with neighbouring India remain heightened, following recent cross-border clashes and political strain.
Presenting the federal budget for FY2025–26, Finance Minister Muhammad Aurangzeb described it as a step towards building a “competitive economy”, with a GDP growth target of 4.2%, slightly higher than the outgoing year’s estimated 2.7%. However, national security took centre stage in his speech.
“The defence of Pakistan remains our top national priority,” said Aurangzeb, while commending the leadership and the armed forces for their role in safeguarding the country’s borders and responding to recent provocations by India.
In recognition of the military’s service, the government also proposed special allowances for officers and soldiers, which will be funded under the newly expanded defence budget. The allocation includes costs related to new recruitments and other operational needs.
This is the second consecutive year of significant defence budget increases. In FY2024–25, the budget was raised by 16.4%. Advisory group Tola Associates had earlier recommended a defence budget of Rs2.8 trillion, citing regional instability and growing security requirements.
Speaking during a federal cabinet meeting after the budget announcement, Prime Minister Shehbaz Sharif expressed confidence in the country’s economic trajectory, stating,
“Pakistan is now in a take-off position, with all economic indicators showing improvement.” He emphasized the need for national unity and effort, adding, “We have outmatched India on the battlefield; now, we must surpass it economically.”
Relations between Pakistan and India deteriorated sharply after a deadly attack in Indian Illegally Occupied Jammu and Kashmir (IIOJK) last month, which India blamed on Pakistan. While Islamabad strongly denied any involvement, military escalation followed as India launched strikes across the border. Though a ceasefire was agreed upon, the situation remains tense.
As Pakistan boosts its defence budget, observers say it reflects not only the country’s security concerns but also its geopolitical priorities. Analysts, however, warn that balancing defence expenditure with economic stability will be crucial to sustaining growth and meeting the government’s fiscal targets.
