Pakistan recently revealed its federal budget for the fiscal year 2025-26, totaling Rs17.57 trillion ($62 billion), marking a 7% decrease in overall spending. However, the budget includes a 20% boost in defense expenditure following a recent military conflict with neighboring India.

Finance Minister Muhammad Aurangzeb presented a budget that allocates Rs2.55 trillion ($9 billion) for defense spending in FY26, up from Rs2.12 trillion in the previous fiscal year.

Aurangzeb emphasized the importance of unity and strength displayed by the nation during the recent military confrontation with India, urging a similar focus on economic growth and welfare.

The military clash between India and Pakistan was triggered by an attack on Hindu tourists in Indian Kashmir in April, leading to a ceasefire after four days of intense fighting.

Key Highlights from Pakistan's 2025-26 Budget:

• GDP/DEFICIT
  • GDP growth projected at 4.2%
  • Nominal GDP estimated at 129.57 trillion rupees
  • Fiscal deficit expected to be 3.9% of GDP
  • Targets a primary surplus of 2.4% of GDP
• INFLATION
  • Targets inflation rate at 7.5%
• EXPENDITURE
  • Total spending set at 17.57 trillion rupees
  • Defense expenditure targeted at 2.55 trillion rupees
  • Projected interest payments at 8.21 trillion rupees
• REVENUE
  • Total gross revenue targeted at 19.28 trillion rupees
  • Total tax revenue goal of 14.1 trillion rupees
  • Aiming for net external receipts of 106 billion rupees

Overall, Pakistan's budget for 2025-26 reflects a strategic approach to balancing defense needs with economic growth and stability in the aftermath of recent military tensions.

Source: Arab News