Pakistan has announced its federal budget for the 2025–26 fiscal year, totaling $62.4 billion, with defense allocations rising by 20% compared to the previous year.
Finance Minister Muhammad Aurangzeb presented the budget in Islamabad on Tuesday before the National Assembly, where opposition lawmakers staged protests during the session. The defense budget has been set at 2.55 trillion Pakistani rupees (approximately $9 billion), up from 2.1 trillion rupees ($7.4 billion) allocated last year.
The defense funding hike comes weeks after a military standoff with neighboring India, a country with which Pakistan has long-standing tensions.
While defense spending saw an increase, the overall size of the budget decreased by nearly 7% compared to the previous fiscal year. The government projects a fiscal deficit of 4.8% of GDP for the year, down from the targeted 5.9% in 2024–25. GDP growth for the upcoming year is forecasted at 4.2%.
The tax revenue target has been set at 14.02 trillion rupees ($49.6 billion), compared to the revised figure of 12.33 trillion rupees ($43.6 billion) for the current fiscal year.
Debt servicing remains a major component of the budget, with interest payments amounting to 8.2 trillion rupees ($29 billion), down from 9.7 trillion rupees ($34.4 billion) last year.
Other key allocations include 1.05 trillion rupees ($3.7 billion) for federal pensions, 1.186 trillion rupees ($4.1 billion) in subsidies, and 1.9 trillion rupees ($6.7 billion) in grants.
