Pakistan may further increase the proposed defence budget for the next fiscal year to deal with the Indian aggression

By maria ali - DEFENCE & I.R AFFAIRS

Official sources told I.R AFFAIRS that due to rapid security-related developments, the authorities concerned have started considering whether the earlier agreed 18% increase in the defence budget for fiscal year 2025-26 will be sufficient.

The issue has been discussed at the level of the Ministry of Finance, the Ministry of Defence and also with the International Monetary Fund, said the sources.

While responding to a question whether Pakistan requested the IMF to allow further increase in defence budget and to compensate it downward adjust the agreed primary budget surplus target, Finance Minister Muhammad Aurangzeb replied that "we remain committed to stay the course both in terms of structural reform agenda and meeting all quantitative and structural benchmarks".

Pre-May 10, the federal government had decided to give an 18% increase in the defence budget over last year's allocation of Rs2.1 trillion. This has also been agreed between the Pakistan Peoples Party and the Pakistan Muslim League-Nawaz during a meeting chaired by Prime Minister Shehbaz Sharif.

However, the IMF had indicated Rs2.42 trillion for defence spending for the next fiscal year, which was higher by only 12%.

The sources said that the IMF did not have an issue with the increase in the defence budget, provided the government has a fiscal room to fund it without compromising the primary budget surplus target of around Rs2.2 trillion or 1.7% of GDP.

The discussions are taking place at a time when the IMF's top man for the region, Jihaz Azour, was in Islamabad. Jihad held important meetings on Wednesday, including with the Finance Minister Muhammad Aurangzeb and some with other high profile state dignitaries, said the sources.