Pakistan Poised to Raise Defence Spending by 18% Amid Mounting Economic Crisis

 Islamabad is expected to announce an 18% increase in its defence budget in the upcoming federal budget presentation on Tuesday, pushing total military expenditure to a staggering Rs 2,500 billion. The move, coming at a time of deepening economic turmoil, underscores the country’s continued emphasis on defence spending despite urgent fiscal challenges.

According to Pakistan’s latest Economic Survey, the country’s public debt has surged to an all-time high of Rs 76,007 billion—almost doubling in just four years. For context, Pakistan’s debt stood at Rs 39,860 billion five years ago and Rs 17,380 billion a decade earlier, marking a nearly fivefold increase over the past 10 years.

The survey paints a troubling picture of Pakistan’s debt composition: domestic debt accounts for Rs 51,518 billion, while external debt stands at Rs 24,489 billion. The document warns that the exponential rise in borrowing has created significant vulnerabilities, with rising interest payments threatening to destabilize the country’s fiscal position. If left unchecked, the trajectory could undermine long-term economic stability, severely impacting development, infrastructure, and social welfare programs.

World Bank data further highlights the deepening socio-economic divide. While neighboring India has lifted approximately 171 million people out of extreme poverty between 2011-12 and 2022-23, Pakistan added an estimated 1.9 million individuals to its poverty rolls in 2024-25. The Bank’s April report noted that the country's projected economic growth rate of 2.6% for FY25 is “insufficient to reduce poverty,” with the poverty rate expected to remain at 42.4% (measured at US$3.65/day, 2017 PPP)—virtually unchanged from the previous year.

Despite these sobering figures, the government appears poised to prioritize national security over economic reform. Critics argue that the budget proposal reflects a misalignment of priorities, as military expenditures continue to rise amid soaring inflation, high unemployment, and overstretched public services.

Observers caution that without substantive economic reforms and prudent fiscal management, Pakistan risks exacerbating its economic woes. As the government increases defence allocations, ordinary citizens continue to grapple with rising living costs and diminished economic opportunity—raising urgent questions about the sustainability and direction of Pakistan’s financial strategy.