Pakistan’s federal government announced a significant increase in the defence budget for the fiscal year 2025-26, allocating Rs2.55 trillion (approximately $9.18 billion).
This represents a 20.2% surge compared to the previous year and marks the largest annual hike in over a decade. The move comes amidst heightened tensions with India, following military clashes between the two nuclear-armed neighbours in May 2025 and a concurrent increase in India’s own defence budget.
The increased allocation pushes defence spending to 1.97% of Pakistan’s GDP, up from 1.7% the previous year, inching closer to the 2% mark after a period of decline. This contrasts sharply with decreases in national spending on health and education, which remain below 1% of GDP.
The defence budget now constitutes 14.51% of the total federal outlay, the highest in recent years.Finance Minister Muhammad Aurangzeb justified the increase, citing the precarious security situation and the armed forces’ commendable border protection efforts.
The budget includes substantial increases across various categories: operational costs (37.22% rise to Rs704.4 billion), civil works (37.4% rise to Rs336.5 billion), and spending on physical assets (20.9% rise to Rs663.1 billion), covering arms and equipment procurement.
Employee-related expenses, including salaries and allowances, will see a 3.8% increase to Rs846.03 billion, with servicemen receiving a special relief allowance.The budget breakdown shows that employee-related expenses remain the largest portion (33.18%), followed by operating expenses (27.62%) and physical assets (26%). Service-wise allocations are: Army (Rs1.17 trillion, 45.9% of the total), Pakistan Air Force (Rs520.75 billion, 20.4%), Navy (Rs265.97 billion, 10.4%), and Inter-Services Organisations (Rs498.11 billion, 19.5%). All services received approximately a 15.45% increase.
An unallocated amount of Rs95.17 billion remains, possibly earmarked for operational costs not directly tied to specific services.
Military pensions, while not part of the defence budget, will receive Rs1.055 trillion – a 4.04% increase.
The significant increase in defence spending follows two previous consecutive years of rises, marking a departure from the decade-long trend of modest annual increases. Despite the increase, Pakistan’s defence spending remains considerably lower than India’s.
