Pakistan increases defence budget by 20 percent
by AFP Staff Writers
Islamabad (AFP) June 10, 2025

Pakistan announced on Tuesday a 20 percent hike in defence spending in this year's federal budget, a month after a conflict with India that saw the worst violence in decades.

More than 70 people were killed in the four-day conflict between the nuclear-armed neighbours in May before a ceasefire was announced.

Finance minister Muhammad Aurangzeb presented a $62 billion budget to parliament on Tuesday evening, allocating 14 percent to the military -- rising from 2.12 trillion Pakistani rupees ($7.5 billion) to 2.55 trillion this coming fiscal year.

It comes after Pakistan's government announced Friday on social media that it was in discussions to acquire 40 new Chinese fighter jets and new air defence systems.

Pakistan came to the brink of default in 2023, as a political crisis compounded an economic downturn and drove the nation's debt burden to terminal levels, before it was saved by a $7 billion bailout from the International Monetary Fund.

It has since then enjoyed a degree of recovery, with inflation easing and foreign exchange reserves increasing.

"We have moved in the right direction," Aurangzeb said at a briefing ahead of the budget announcement in parliament.

"Any transformation takes two to three years and we have done a good job in terms of where we wanted to take things."

The budget will be voted on by parliament later this month, but the government's safe majority means only minor changes are expected.

An economic survey released on Monday for the outgoing fiscal year which ends on June 30, showed that the country missed almost all the targets set at the beginning of the year, with GDP expected to grow by 2.7 percent - falling short of the initial 3.6 percent target set in the last budget.

The government has set an ambitious target of 4.2 percent GDP growth for the next fiscal year.

The budget set aside 8 trillion rupees ($28.4 billion) to service its huge amount of debt.

A World Bank report said last week that nearly 45 percent of Pakistan's 240 million population is living below the poverty line, while the country's literacy rate stands at 61 percent.

It is the government's second budget since coming to power last year, in an election which saw the wildly popular leader Imran Khan jailed for charges he says were politically motivated.

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