ISLAMABAD — Pakistan has announced a 20 percent boost in its defense budget for the 2025–26 fiscal year, following heightened tensions and a recent military standoff with neighboring India.
Presenting the new budget to the National Assembly on Tuesday, Finance Minister Muhammad Aurangzeb said the government would allocate Rs 2,550 billion ($9.04 billion) for defense, up from Rs 2.12 trillion ($7.44 billion) in the previous year.
“National defense is the most important priority of the government,” Aurangzeb said during his budget speech. “For this national duty, Rs 2,550 billion [$9.04 billion] will be allocated.”
The budget comes weeks after the worst confrontation between the two nuclear-armed neighbors in nearly three decades. The standoff began after an attack in Indian-administered Kashmir, which left 26 Hindu pilgrims dead. India blamed militants allegedly backed by Pakistan, a claim Islamabad has denied. A four-day exchange of missile, drone, artillery, and air strikes followed, ending with a ceasefire on May 10.
Pakistan’s military branches will see notable budget increases under the new plan:
- The Army is set to receive over Rs 1,165 billion, up from Rs 1,009 billion.
- The Air Force will receive Rs 520.74 billion, compared to Rs 451 billion previously.
- The Navy will see its budget rise to Rs 265.97 billion, from Rs 230 billion.
The increase reflects the government’s drive to strengthen military capabilities after India’s strikes last month hit targets deep inside Pakistan, including an air base in Rawalpindi. Pakistani officials said they have been offered new Chinese military equipment, including fighter jets, missile defense systems, and surveillance aircraft.
“After the Pak-India war, India has threatened to block the flow of river water into Pakistan,” Aurangzeb warned. “India is trying to use water as a weapon. I want to make it clear that water guarantees Pakistan’s survival and no hindrance will be tolerated in this respect.”
Despite its defense boost, Pakistan is pursuing fiscal reforms under a $7 billion IMF program approved last year. The federal budget, totaling Rs 17.57 trillion ($62 billion), cuts overall spending by 7%. Debt servicing will consume nearly half the budget, with Rs 8.21 trillion ($29 billion) allocated to repayments.
The government aims for 4.2% GDP growth next fiscal year, while targeting a 3.9% fiscal deficit. Inflation is projected at 7.5%.
“The budget is being presented at a very important and historic moment when the nation in recent days showed extraordinary unity, determination and strength,” said Aurangzeb.
The defense budget remains dwarfed by India’s military spending, which stands around $80 billion, with further increases under discussion. Still, many in Pakistan view the recent standoff as evidence their military remains effective.
The defense boost comes as Pakistan continues to recover from an economic crisis that forced it to seek IMF assistance in 2023. Prime Minister Shehbaz Sharif acknowledged the sacrifices of ordinary citizens amid rising inflation and spending cuts.
“The sacrifices the common man has made,” Sharif said, “This is a question that the elite, including me, have to answer.”