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fiscal year

Pakistan unveils historic defence spending plan in new budget

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Pakistan unveils

ISLAMABAD: Pakistan has proposed increasing the defence budget to Rs 3,000 billion for the upcoming fiscal year, according to official budget documents.

For the current fiscal year, the defence budget was initially set at Rs 2,550 billion, while the revised allocation has reached Rs 2,595 billion.

The new budget proposal also includes Rs 822 billion for military pensions, compared to Rs 742 billion allocated in the current fiscal year.

Under administrative expenditures, Rs 10.9 billion has been proposed for the next fiscal year. In the current year, these expenses were set at Rs 7.95 billion, while revised figures have increased to Rs 11.74 billion.

Personnel-related expenditures in the defence sector are projected at Rs 967 billion for the upcoming year, up from Rs 846 billion allocated in the current budget and Rs 851 billion in revised estimates.

Operational expenses are proposed at Rs 743 billion for the next fiscal year, compared to Rs 704 billion in the current year and Rs 721 billion in revised spending.

The proposed allocations reflect an overall increase in defence-related expenditures amid evolving security and administrative requirements.

Finance Minister Muhammad Aurangzeb said the increase in Pakistan’s defense budget for the 2026–27 fiscal year was driven by internal security challenges in two provinces and broader border-related security concerns.

Speaking to media after presenting the federal budget, Aurangzeb said the government had to take into account the security situation along Pakistan’s borders while formulating defense allocations.

“The defense budget has been increased in view of security issues at two borders and the deteriorating law and order situation in two provinces,” he said.

Pakistan sets Rs. 4,264b development budget for next fiscal year

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Pakistan sets

ISLAMABAD: Pakistan’s total development budget for the upcoming fiscal year has been estimated at Rs. 4,264 billion, according to official budget documents, outlining allocations for federal and provincial development programmes across the country.

The documents show that the federal government’s development programme stands at Rs. 1,126 billion, while the combined size of provincial development initiatives has been projected at Rs. 3,138 billion.

Among the provinces, Punjab is expected to spend Rs. 1,450 billion on its development programme. Of this amount, Rs. 1,306 billion will be generated from domestic resources, while Rs144 billion is proposed under foreign assistance.

Sindh’s Annual Development Programme has been set at Rs. 816 billion, including Rs. 520 billion from local resources and Rs. 296 billion in foreign assistance.

Khyber Pakhtunkhwa’s development programme is proposed at Rs. 564 billion, with Rs. 377 billion allocated from provincial resources and Rs187 billion expected through foreign assistance.

For Balochistan, the Annual Development Programme is projected at Rs. 308 billion, including Rs. 275 billion from local resources and Rs33 billion in foreign assistance.

Overall, the combined provincial development spending from domestic resources has reached Rs2,478 billion, while foreign assistance for provincial projects is estimated at Rs660 billion, according to the documents.

Foreign direct investment drops 43.3% in July–Dec FY2026

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Foreign direct investmen

ISLAMABAD: Pakistan witnessed a sharp decline of 43.3 percent in foreign direct investment (FDI) during the first half of the current fiscal year, from July to December 2025, while the country’s exports also fell by 5 percent to $15.5 billion.

According to the Finance Ministry’s Economic Outlook Report, total FDI during the six-month period stood at $810 million. Meanwhile, imports surged by 12.3 percent, crossing $31 billion.

The report stated that workers’ remittances increased by 10 percent to $19.73 billion during the same period, while the current account deficit was recorded at $1.17 billion.

The exchange rate showed slight depreciation, with the dollar rising from Rs 278.7 to Rs 279.9. However, large-scale manufacturing (LSM) output posted a 6 percent growth during the first five months of the fiscal year.

The Finance Ministry reported a primary surplus of Rs 3,651 billion, reflecting improved fiscal discipline.

According to the outlook, Federal Board of Revenue (FBR) collections increased by 9.5 percent to Rs 6,160 billion, while non-tax revenue rose by 4.8 percent to Rs 3,581 billion.

The report further noted that State Bank of Pakistan’s foreign exchange reserves increased to $16.1 billion.

 It added that overall economic stability remained intact during the first half of FY2026, with expectations of sustained economic momentum in the ongoing fiscal year.

The Finance Ministry said improved fiscal management helped support macroeconomic stability. Inflation is expected to remain between 5 and 6 percent in the current month, while price pressures remain under control and LSM growth has shown noticeable improvement.

The report also highlighted that foreign exchange reserves remain strong, the rupee has stayed stable, and the Pakistan Stock Exchange has witnessed a strong rally, ranking among the best-performing markets globally.