Pakistan’s defense budget for the year 2025-26 is expected to rise by 20%, reaching Rs. 2,550 billion, according to sources. This increase will be shared fairly among the three branches of the armed forces the Army, Navy, and Air Force as well as inter-services departments.
Last year, the defense budget was Rs2,122 billion. That was already a 17% jump from the previous year’s allocation of Rs. 1,854 billion. In terms of the country’s economy, last year’s defense budget made up 1.71% of Pakistan’s GDP.
The government is also planning a 10% increase in salaries for government employees. In addition, pensions are expected to go up by 7.5% to 10%, which may help some retirees manage rising costs of living.
On the other hand, major tax relief for the public seems unlikely in the upcoming budget. One key reason is the stance of IMF, which does not support keeping the current Rs. 1.2 million annual income as tax-free. If the government accepts the IMF’s condition, it may lower the tax exemption limit, meaning more people would have to pay income tax.
The final budget will be announced soon, and it will reflect the government’s efforts to balance defense needs, employee welfare, and international financial commitments. While salary and pension hikes may bring some relief, limited tax exemptions could create new challenges for middle-income earners.
