Pak raises defence spend by 20% in annual Budget

But slashes overall federal expenditure by 7% for July-June financial year

- ASIT RANJAN MISHRA

Pakistan on Tuesday raised its defence expenditure by 20 per cent to $9 billion in the annual federal Budget for 2025-26 (FY26) over the preceding year, but slashed overall federal expenditure by a hefty 7 per cent for the July-June financial year.

This is likely to invite close scrutiny from New Delhi that has accused Pakistan of diverting financial support from multilateral agencies towards unproductive defence spending targeted at India.

New Delhi last week vehemently opposed Asian Development Bank's (ADB's) financial assistance of $800 million to Pakistan, raising concerns about potential misuse of the funds. Last month, the International Monetary Fund (IMF) also approved a $1 billion loan to Pakistan despite India's strong objection.

Indian officials cautioned the ADB on Pakistan's increasing defence expenditure, its declining tax-to-GDP ratio, and the lack of demonstrable progress on key macroeconomic reforms.

At the ADB Board meeting, India highlighted that while Pakistan's tax collection as a share of GDP declined from 13 per cent in FY18 to 9.2 per cent in FY23, there has been a significant increase in defence spending during the same period.