Islamabad: Pakistan’s decision to increase its defence budget by 18 per cebnt, allocating over Rs 2.5 lakh crore for 2025-26, has stirred fresh controversy as the country battles severe economic distress and inflation surging above 38 per cent. Framed as a response to heightened tensions with India, particularly after the April 22 Pahalgam terror attack that claimed 26 lives, mostly tourists, the hike has raised alarm among economists who warn it could derail critical economic reforms and divert funds from essential social services.
Pakistan’s increased military spending despite its crisis, comes just days after the International Monetary Fund (IMF) approved a USD 1 billion (approximately Rs 8,500 crore) loan tranche for the country. The hike is expected to be formally announced when Islamabad’s budget is presented on June 2.
Pakistan is currently grappling with over USD 22 billion in external debt and, with the latest disbursement, has become the IMF’s fourth-largest borrower.
Pakistan govt moving towrads expensive infra projects
The Line of Control (LoC) has witnessed increased cross-border firing this year, prompting Islamabad to promise stronger military preparedness. At the same time, the Shehbaz Sharif government is forging ahead with expensive infrastructure projects, including major hydropower initiatives.
Pakistan Planning and Development Minister Ahsan Iqbal underscored water security as a top strategic priority, accusing India of “water aggression” via upstream dam construction on rivers governed by the Indus Waters Treaty. “We will not allow India to exploit our water resources,” Iqbal stated, vowing to fast-track work on the USD 14 billion Diamer-Bhasha Dam project.
Iqbal confirmed that the federal government would increase its defence budget for the 2025–26 fiscal year, citing recent military tensions with India and New Delhi’s suspension of the Indus Waters Treaty as primary reasons, according to a report by the Karachi-based newspaper Dawn.
