2024-25 Budget
During the annual budget presentation in the National Assembly session, Finance Minister Muhammad Aurangzeb revealed that Pakistan has earmarked Rs2,122 billion for defence in the fiscal year 2024-25. This substantial allocation comprises several components:
- Rs815 billion for Employee Related Expenses
- Rs513 billion for Operating expenses
- Rs548 billion for physical assets
- Rs244 billion for civil works
Additionally, an extra Rs6 billion has been set aside for ‘defence administration’, bringing the total allocation to Rs2,128 billion.
This budget marks a significant increase compared to the previous fiscal year’s allocation of Rs1,854 billion.
The allocation closely aligns with the forecasts of the International Monetary Fund (IMF), with whom Pakistan is negotiating an Extended Fund Facility to stabilize its economy.
The increase in defence spending represents a more than 19% rise from the previous year’s allocation of Rs1.804 trillion.
The IMF, in its second and final review documents of the Stand-By Arrangement, had forecasted this rise in defence allocation.
Pakistan recently concluded a nine-month $3 billion IMF programme, which helped prevent a sovereign default.
However, the government of Prime Minister Shehbaz Sharif emphasizes the necessity of a fresh, longer-term programme to address both domestic and external imbalances.
The short-term IMF programme aimed at addressing these imbalances has yielded positive results, including moderate economic growth, improved fiscal position, and increased foreign exchange reserves.
The IMF had projected Pakistan’s defence allocation to be 1.72% of its gross domestic product (GDP) in FY25, reflecting the country’s commitment to maintaining a robust defence capability while navigating economic challenges.
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