Pakistan is planning to increase its defence budget by approximately PKR 100 billion in the next fiscal year, as the government prepares a new budget under an International Monetary Fund (IMF)-backed reform programme that also projects a significant rise in revenues.
Defence Spending Estimates
Citing a report by IMF staff, the Dawn newspaper reported that defence spending for 2026–27 is estimated at PKR 2.665 trillion, higher than PKR 2.564 trillion in the current fiscal year. The report also noted that Pakistan’s federal revenues for 2026–27 are expected to reach PKR 17.144 trillion, an increase of more than PKR 2 trillion from the current year, reflecting a growth rate of 13.5%.
Fiscal Projections and Reforms
Under the IMF-supported plan, combined spending by federal and provincial governments is projected to increase by 0.2% of GDP, reaching PKR 4.227 trillion. The government has also pledged to complete the digitisation of all federal and provincial payments by June 2027.
Anti-Corruption Measures
As part of broader reforms, authorities will identify the 10 most corruption-prone institutions by the end of this year for detailed review and audit, while also strengthening provincial anti-corruption agencies.
Economic Incentives
The government has further agreed not to introduce new incentives for special economic zones, export processing zones, and special technology zones, and to phase out existing incentives by 2035, with the aim of creating what the report described as a level playing field across the economy.
Economic Vulnerability
The Dawn report also noted that, apart from those living in extreme poverty and receiving social assistance, around 40% of the population remains economically vulnerable.
IMF Mission in Pakistan
An IMF mission is currently in Pakistan to finalise budget discussions ahead of the 2026–27 budget, which is expected to be presented to the cabinet and parliament early next month.
