Logo

Pakistan Boosts Defence Budget by 20% Amid Overall Spending Cuts

Pakistan’s latest budget boosts defence allocation by 20%, totaling over $11.6 billion with pensions, while trimming overall spending by 7%. The economy faces mounting debt nearing $270 billion and sluggish growth projected at 4.2% next year. The government aims to balance geopolitical challenges and IMF reforms to stabilize and transform the economy.

Pakistan Boosts Defence Budget by 20% Amid Overall Spending Cuts

Pakistan Prioritizes Defence as Overall Spending Falls

Pakistan’s latest fiscal budget reveals a striking shift in spending priorities, with defence allocation surging by 20% while the overall government expenditure shrinks by 7%. This budget, spanning July 2025 to June 2026, assigns 2.55 trillion Pakistani rupees ($9 billion) to defence, a significant rise from last year’s 2.12 trillion, excluding an additional 742 billion rupees ($2.63 billion) for military pensions.

Economic Growth Set Against Rising Debt

Despite the increased security spending, Pakistan faces mounting economic challenges. Its debt has ballooned to nearly 76 trillion rupees ($270 billion) in just nine months of the current fiscal year. The government projects a modest economic growth rate of 4.2% for the 2025-26 year, with a fiscal deficit expected to come down to 3.9% of GDP from 5.9% the year prior.

However, recent growth has been sluggish — current fiscal year estimates point to a 2.7% rise in GDP, missing the previously set target of 3.6%. For comparison, South Asia’s average growth hovered around 5.8% last year, with expectations of 6% in 2025, underscoring Pakistan’s lagging pace within the region.

Details Behind Defence Spending

The overall defence budget totals approximately 3.29 trillion rupees ($11.67 billion) when including military pensions. Furthermore, around 704 billion rupees ($2.5 billion) are earmarked for equipment purchases and physical assets, signaling an emphasis on modernizing and strengthening military capabilities.

Prime Minister Shehbaz Sharif emphasized the need for Pakistan to excel economically, especially in light of recent border tensions. The heightened defence budget follows a violent clash in April linked to a terrorist attack in Jammu and Kashmir, which claimed 26 lives. India attributes the unrest to support from Pakistan-based groups, elevating geopolitical tensions.

Aligning with International Financial Support

Last month, Pakistan secured a crucial $2.4 billion bailout from the International Monetary Fund (IMF). The Finance Minister, Muhammad Aurangzeb, underscored that the FY26 budget was structured in close cooperation with IMF standards.

The government aims to complete the privatisation of Pakistan International Airlines as part of these reforms and hopes that successive interest rate cuts will help lower borrowing costs. Yet, economists caution that monetary easing alone may not stimulate enough investment amid fiscal restrictions and required reforms.

Aurangzeb described the budget as laying the groundwork for transforming Pakistan’s economic fabric. Key goals include boosting exports, shoring up foreign currency reserves to prevent future balance of payment crises, and fostering a competitive market environment. "Our budget strategy is to change the economy's DNA," he asserted.

Looking Ahead

Pakistan’s decision to raise defence spending while trimming overall budget outlays illustrates a challenging balancing act amid rising debt and economic pressures. The coming year will test whether these fiscal choices can spur growth without compromising economic stability.

India Aims to Become a Leading Global Defence Exporter, Says PM Modi
India Aims to Become a Leading Global Defence Exporter, Says PM Modi

Prime Minister Narendra Modi has announced India's ambition to become one of the world's leading defence exporters, highlighting the nation's growing defence ecosystem and the importance of self-reliance. He emphasized the role of the 'Make in India' initiative and urged citizens, especially youth in Jammu and Kashmir, to support domestic manufacturing, linking this mission to employment generation and economic empowerment across the country.

Trump Urges Apple to Manufacture iPhones in the US, Threatens Tariffs
Trump Urges Apple to Manufacture iPhones in the US, Threatens Tariffs

President Trump is urging Apple to manufacture its iPhones in the United States, threatening a 25% tariff on products made overseas, including in India. This push follows a conversation with Apple CEO Tim Cook and broadens to encompass all smartphone manufacturers. Industry experts warn that relocating production to the U.S. could dramatically increase costs for consumers. The debate surrounding tariffs continues as the White House remains unclear about their implementation.

Mallikarjun Kharge Critiques 11 Years of Modi Government's Failures
Mallikarjun Kharge Critiques 11 Years of Modi Government's Failures

On the 11th anniversary of the Modi government, opposition leader Mallikarjun Kharge sharply criticizes the ruling administration for rising unemployment, inflation, and unfulfilled promises. He emphasizes the negative impact on youth, farmers, and marginalized communities, asserting that the initial promises of 'good days' have shifted to feelings of despair among the populace.

European Companies Reduce Investments in China Amid Economic Slowdown
European Companies Reduce Investments in China Amid Economic Slowdown

European companies are scaling back investments and cutting costs in China amid a slowing economy and heightened market competition, according to the 2025 Business Confidence Survey by the European Chamber of Commerce in China. Overcapacity in industries like electric vehicles and rising trade tensions with Europe and the U.S. are contributing to declining profits and lowered business confidence across nearly 500 surveyed firms.

Digital Misinformation Threatens U.S.-China Trade Truce
Digital Misinformation Threatens U.S.-China Trade Truce

Recent misinformation regarding the U.S.-China trade truce is proliferating across social media, casting doubt on the agreement. Falsehoods suggest Americans are panic-buying Chinese goods, perpetuated by state media. Investigations reveal a coordinated disinformation campaign aimed at luxury brands, complicating the narrative as trade negotiations evolve.

India Launches Bharat Forecasting System for Enhanced Weather Predictions
India Launches Bharat Forecasting System for Enhanced Weather Predictions

India has unveiled the Bharat Forecasting System (BFS), the world's highest-resolution weather model operating on a 6-kilometre grid. Powered by the supercomputer Arka, this advanced system aims to enhance weather predictions for disaster management and agriculture, addressing the increasing impact of weather anomalies on the economy. The BFS utilizes a network of Doppler Weather Radars, significantly improving localized forecasting capabilities amidst rising food prices influenced by climate extremes.

Assam to Enhance Incentives for Electronics Manufacturers, Says CM Sarma
Assam to Enhance Incentives for Electronics Manufacturers, Says CM Sarma

Assam's Chief Minister Himanta Biswa Sarma has declared significant enhancements to incentives for electronics manufacturers establishing operations in the state, particularly following the introduction of the Ratan Tata Electronic City. During the Electronics Round Table 2025, he confirmed a 60% additional incentive on top of existing Union government offerings, aimed at facilitating industry entry and growth in Assam. The development plans prioritize attracting local talent and improving infrastructure, including social amenities.

EU Strongly Criticizes US Steel Tariff Hike Amid Trade Talks
EU Strongly Criticizes US Steel Tariff Hike Amid Trade Talks

The European Commission expressed strong regret over the United States' decision to raise steel tariffs from 25% to 50%, citing increased economic uncertainty and higher costs for transatlantic consumers and businesses. This tariff hike adversely affects several EU steel exporters and hampers ongoing trade negotiations by worsening diplomatic tensions.

Pakistan Set to Boost Defence Budget Amid Rising Regional Tensions
Pakistan Set to Boost Defence Budget Amid Rising Regional Tensions

Pakistan is set to unveil a Rs 17.6 trillion federal budget for 2025-26 featuring a significant increase in defence expenditure, potentially surpassing Rs 2.5 trillion. Amid heightened tensions with India following recent border clashes, defence spending could rise by 18%, with the government aiming for 4.2% GDP growth and controlled inflation at 7.5%. The budget balances security needs with economic recovery targets.

Elon Musk Voices Concerns Over Trump’s ‘Big, Beautiful Bill’ Tax Package
Elon Musk Voices Concerns Over Trump’s ‘Big, Beautiful Bill’ Tax Package

The US House recently passed the 'big, beautiful bill,' a significant tax and spending package championed by Donald Trump. Elon Musk, previously a strong Trump backer and leader of a federal cost-cutting initiative, publicly criticized the bill for increasing the deficit by $600 billion. This marks a growing rift within Republican leadership as the bill advances to the Senate, facing potential opposition from fiscally conservative members.

Elon Musk Criticizes Trump's 'Big, Beautiful' Bill Over Deficit Concerns
Elon Musk Criticizes Trump's 'Big, Beautiful' Bill Over Deficit Concerns

Tesla CEO Elon Musk has publicly expressed disappointment with President Trump's 'One Big Beautiful Bill Act,' stating it would increase the federal deficit rather than reduce it. The bill, aiming to extend tax cuts and cut social programs, passed the House narrowly and faces criticism from fiscal conservatives. The White House, however, projects strong economic growth and deficit savings.

U.S. Credit Default Swaps Surge Amid Debt Ceiling Concerns, Panic Likely Overblown
U.S. Credit Default Swaps Surge Amid Debt Ceiling Concerns, Panic Likely Overblown

Investors are increasingly purchasing credit default swaps to insure against potential U.S. government debt default amid unresolved debt ceiling issues. CDS spreads on U.S. government debt have surged to near two-year highs, reflecting political risk rather than genuine default fear. Analysts predict this spike is temporary as Congress works toward a budget deal before July to raise the debt limit. The U.S. government is expected to avoid default as it has in prior crises, though fiscal challenges remain prominent following Moody's recent credit rating downgrade.

Elon Musk Steps Down as Top Advisor to Trump After Criticizing Spending Bill
Elon Musk Steps Down as Top Advisor to Trump After Criticizing Spending Bill

Elon Musk has stepped down from his advisory role to President Donald Trump, following his public criticism of the president's sweeping tax and immigration bill, dubbed the "big beautiful bill." Musk called it a "massive spending bill," sparking fiscal conservative dissent. The legislation now faces Senate scrutiny amid internal Republican tensions concerning fiscal responsibility.

Australia’s Defence Minister to Meet US, Japan Counterparts in Key Trilateral Talks
Australia’s Defence Minister to Meet US, Japan Counterparts in Key Trilateral Talks

Australia’s Defence Minister Richard Marles will meet US Secretary of Defense Pete Hegseth and Japan’s Defence Minister Gen Nakatani at the Shangri-La Dialogue in Singapore. The first trilateral defence talks since President Trump’s return will focus on regional security cooperation, the AUKUS submarine deal, defense spending, and managing tensions with China.

Elon Musk Advised by Father to Rest and Visit India Amid Business Focus
Elon Musk Advised by Father to Rest and Visit India Amid Business Focus

Errol Musk urges his son Elon Musk to take breaks despite his energetic work ethic and encourages a visit to India, highlighting the country's booming economy. He also recommends Elon focus on Neuralink's groundbreaking brain-computer interface developments, while expressing optimism for future space research and global economic growth.

Elon Musk Condemns Trump-Backed Budget Bill as Deficit-Inflating Abomination
Elon Musk Condemns Trump-Backed Budget Bill as Deficit-Inflating Abomination

Elon Musk publicly condemned the extensive budget bill supported by former President Donald Trump, labeling it a "disgusting abomination" that will dramatically increase the federal deficit to $2.5 trillion. Despite Musk's previous role in a Trump government initiative to reduce spending, he criticized the legislation for containing excessive allocations and worsening national debt. The White House maintained strong support for the bill, citing projected economic growth, while some Republican lawmakers voiced fiscal concerns.

Trump Administration Orders Immigration Judges to Expedite Case Dismissals, Speeding Up Arrests
Trump Administration Orders Immigration Judges to Expedite Case Dismissals, Speeding Up Arrests

The Trump administration has introduced a memo directing immigration judges to dismiss cases quickly through oral motions, bypassing usual procedures. This tactic enables expedited removals and mandatory detentions but has raised legal disputes over misinterpreting the Immigration and Nationality Act. Critics warn it burdens the detention system and undermines fairness in immigration enforcement.

France Backs Palestinian Authority’s Push to End Hamas Rule in Gaza
France Backs Palestinian Authority’s Push to End Hamas Rule in Gaza

Palestinian President Mahmoud Abbas announced plans for Hamas to relinquish its weapons and authority in Gaza, proposing the deployment of international forces for protection and stability. In a letter to French and Saudi leaders, he emphasized readiness for reforms within the Palestinian Authority, including upcoming elections, and reaffirmed commitment to a two-state solution under international supervision. The French government welcomed these commitments, highlighting this as a critical step toward peace amid ongoing conflict.