Cash-strapped Pakistan hikes defence budget by 18% amid India tensions: Reports

Despite being in the grip of a deep economic crisis, Pakistan has approved an 18% hike in its defence spending, pushing the allocation beyond Rs 2.5 trillion for the upcoming 2025–26 fiscal year. The increase comes amid escalating tensions with India following the April 22 terror attack in Pahalgam, Jammu and Kashmir, which left 26 people dead.

The decision was finalised during budget discussions between the ruling Pakistan Muslim League-Nawaz (PML-N) and its key coalition partner, the Pakistan People’s Party (PPP). The defence hike is part of a Rs 17.5 trillion budget framework and reflects what both parties described as a response to “prevailing security threats” in the region.

In the ongoing fiscal year (2024–25), Pakistan had already raised defence spending by nearly 15% to Rs 2,122 billion. Defence remains the second-largest expense in the national budget after debt servicing, which currently consumes Rs 9,700 billion.

The budget move follows a rapid breakdown in India-Pakistan ties after India imposed strong diplomatic and economic retaliations against Islamabad, including suspending the Indus Waters Treaty and shutting the Attari border. Pakistan responded by halting trade and closing its airspace to Indian flights.

Further raising concerns, Pakistan conducted back-to-back missile tests in early May, launching both the Abdali Weapon System and the Fatah-series surface-to-surface missiles. The moves signal a clear shift towards military posturing amid fragile regional dynamics and worsening bilateral relations.