The Government of Pakistan has unveiled the Federal Budget 2025–26 with a total outlay of Rs17,573 billion, marking significant allocations to defence, debt servicing, and provincial transfers in a bid to balance national security, economic recovery, and fiscal responsibility.
According to official budget documents released on Tuesday, the government has allocated Rs2,550 billion to the defence sector, representing an increase of nearly 19% from the previous year’s allocation of Rs2.1 trillion. The substantial rise reflects Pakistan’s emphasis on enhancing national security in the face of evolving regional threats and strategic challenges.
Read More: Matric Result Dates to Be Finalised on June 13
A dominant portion of the budget—Rs8,207 billion—has been earmarked for interest payments on public debt, underlining the growing burden of debt servicing on the federal exchequer. The allocation slightly exceeds the defence budget, highlighting the pressing fiscal strain caused by accumulated loans and interest obligations.
Provincial Transfers and Revenue Targets
In line with the 18th Amendment and the National Finance Commission (NFC) Award, Rs8,206 billion will be transferred to provinces, aimed at promoting regional development, social sector spending, and administrative decentralisation.
To support its expansive spending plans, the government has projected total revenue at Rs19,278 billion. This includes tax revenue of Rs14,131 billion, to be collected by the Federal Board of Revenue (FBR), and non-tax revenue of Rs5,147 billion. These ambitious revenue targets signal the government’s intent to broaden the tax base and enhance fiscal discipline, while meeting International Monetary Fund (IMF) conditionalities.
Read More: Over 88,000 Pilgrims to Arrive Home by July
The budget arrives at a time of continued economic uncertainty, rising inflation, and mounting pressure from global financial institutions to implement structural reforms. By prioritising defence and debt obligations, the government aims to strike a balance between security imperatives and fiscal stability, while provincial transfers and development spending are intended to revitalise the economy and address regional disparities.
The budget will now be debated in parliament before final approval later this month.
