Pakistan Eyes PKR 2.665 Trillion (USD 9.2 Billion) Defence Budget Amid IMF Reforms

Pakistan is expected to increase its defence budget by nearly PKR 100 billion in the 2026-27 fiscal year while implementing reforms under an International Monetary Fund (IMF) assistance programme, according to a report by Dawn newspaper.

Citing the IMF staff report released after the third review of Pakistan’s USD 7 billion Extended Fund Facility (EFF) and the second review of the USD 1.4 billion Resilience and Sustainability Facility (RSF), the report said defence expenditure is projected to rise to PKR 2.665 trillion from PKR 2.564 trillion in the current fiscal year.

The IMF has projected Pakistan’s total federal revenues for 2026-27 at PKR 17.144 trillion , marking an increase of more than PKR 2 trillion or 13.5 per cent over the current year.

As part of the reform programme, Pakistan has committed to increasing combined federal and provincial expenditure to PKR 4.227 trillion and digitising all government payments by June 2027 .

The government will also identify the country’s 10 most corruption-prone institutions for audits and reforms, while provincial anti-corruption agencies are expected to be strengthened.

Islamabad has additionally agreed not to introduce new incentives for special economic zones, export processing zones and technology zones , while existing incentives will be phased out by 2035 to create a level economic playing field.

The IMF’s Extended Fund Facility is designed to support countries facing serious balance-of-payments problems through long-term structural reforms, while the Resilience and Sustainability Facility provides financing for climate resilience and economic sustainability.

India has stayed away from IMF bailout programmes since the 1991 economic crisis, which paved the way for the Liberalisation, Privatisation and Globalisation (LPG) reforms. Over the past three decades, the country has depended on internal economic measures and robust foreign exchange reserves instead of seeking IMF assistance.

The report noted that nearly 40 per cent of Pakistan’s population remains economically vulnerable despite ongoing reforms.