Government to Allocate Rs. 2.34 Trillion for Defense in Next Fiscal Year Amid Economic Growth Projections

The Ministry of Finance has released its Medium-Term Macroeconomic Framework, which includes plans to allocate Rs2.34 trillion for defense expenditures in the next fiscal year. This significant allocation comes as the ministry projects a favorable economic outlook, with the Gross Domestic Product (GDP) growth expected to reach 4.8% for the fiscal year 2025-26.

The report also indicates a positive trend in controlling inflation, forecasting a decline from the current 12% to 7.5% in the coming year. Despite these promising economic indicators, the ministry has warned of a substantial financial deficit of Rs9,655 billion, primarily driven by an interest bill on loans exceeding Rs10,000 billion.

On the revenue side, the Federal Board of Revenue (FBR) is expected to see an increase in tax revenue, reaching Rs15,555 billion, with non-tax revenue projected at Rs3,851 billion. Additionally, the petroleum levy is anticipated to generate Rs1,388 billion.

The report further outlines external financial projections, estimating exports at $37.95 billion and remittances at $31.70 billion for the next fiscal year. In addition to defense, the government plans to allocate Rs1,480 billion for development projects.

This economic framework reflects the government’s strategic approach to balancing fiscal policies, aiming to stimulate economic growth while managing budgetary challenges and ensuring robust defense capabilities.