Budget 2025-26: Defense budget likely to rise by 20% to Rs2,550bln

Pakistan’s defense budget likely to witness a rise by 20 per cent to Rs2,550 billion in the budget 2025-26, ARY News reported on Tuesday, citing sources.

According to sources, it is expected that Rs. 2,550 billion will be allocated for defense in the upcoming fiscal year.

The estimated increase in the defense budget could reach up to 20%, with proportional allocations planned for the three armed forces as well as inter-services departments, sources said.

In the current fiscal year, Rs2,122 billion was allocated for defense, which amounted to 1.71% of the country’s GDP.

This marked a 17% increase compared to the previous fiscal year, during which Rs1,854 billion was spent on defence.

Meanwhile, the federal government has proposed a 10 per cent increase in salaries for government employees in the budget 2025–26, while pensions are likely to be raised between 7.5% and 10%.

According to budget 2025-26 proposals, the salaries and pensions of the government employees likely to be raised.

However, prospects for significant tax relief for salaried individuals appear dim, as the International Monetary Fund (IMF) has reportedly objected to maintaining the current annual tax-free income threshold of Rs1.2 million.