Budget tailored to please Pakistan’s armed forces

The Pakistani military is already involved in a wide range of business operations but now development allocations are being cut to meet defence needs.

The Pakistan government has proposed an outlay of 2.55 trillion Pakistani rupees or more than $9 billion as the defence budget for fiscal 2025-26, marking the highest annual increase (20.2% over the last fiscal) in military spending in more than a decade. This comes at a time when the country is grappling with a host of economic issues, including dwindling foreign exchange reserves, a balance of payments crisis and perpetual reliance on handouts from international financial institutions and benefactors such as China.

Given that the Pakistani military still does not make public all aspects of its budget, there is a need for multilateral financial institutions and the world community to keep a close watch on how funds from loans and bailouts are used by the Pakistan government. (AFP)

Officials in Islamabad have justified the enhanced defence spending by pointing to tensions with India and New Delhi’s targeted military strikes on terrorist infrastructure within Pakistan in May. However, Pakistan’s latest allocation gives the military 1.97% of the country’s GDP after almost a decade of decline in defence spending. In marked contrast, Pakistan’s spending on health and education fell in the previous fiscal to less than 1% of the GDP.

These developments only point to the outsized role of the Pakistani military in shaping policies that should be in the hands of the civilian government. The Pakistani military establishment is already involved in a wide range of business operations but now development allocations are being slashed to meet defence needs. India has already expressed concerns about the aid provided to Pakistan by the International Monetary Fund (IMF) being diverted to sectors other than development. Given that the Pakistani military still does not make public all aspects of its budget, there is a need for multilateral financial institutions and the world community to keep a close watch on how funds from loans and bailouts are expended by the Pakistan government.