Pakistan Military Presses For Hefty Hike In Defence Budget As IMF Flags Fiscal Risks

Last Updated:May 18, 2026, 11:11 IST

Sources said the Finance Ministry is currently considering a more modest increase of around 5 per cent to 7 per cent in defence spending

As Pakistan prepares to unveil its federal budget for the fiscal year 2026-27 next month, a major tussle is underway within the government over the country’s defence spending amid mounting pressure from the International Monetary Fund (IMF). According to exclusive information accessed by CNN-News18 from a top source in Pakistan’s Finance Ministry, the Pakistan military has sought a steep increase of 20 per cent to 25 per cent in the upcoming defence budget despite Islamabad’s worsening economic condition and strict scrutiny from international lenders.

The demand from Pakistan’s military headquarters comes at a time when the country is already battling severe financial stress, high debt obligations, inflationary pressures and a fragile foreign exchange position. Pakistan’s current defence allocation stands at approximately Rs 2550 billion after it was raised by nearly 20 per cent in the previous fiscal year along with additional funding support.

However, the Pakistan government is unlikely to fully accommodate the military’s latest demand. Sources said the Finance Ministry is currently considering a more modest increase of around 5 per cent to 7 per cent in defence spending for the next fiscal due to sustained pressure from the IMF, which has raised serious concerns over Pakistan’s rising security and military expenditures.

An IMF special team is presently in Islamabad holding extensive discussions with Pakistan’s economic managers over the framework for the 2026-27 budget. The talks are focused on several critical fiscal areas including defence and security expenditures, tax revenue targets, subsidy rationalisation, proposed policy reforms and development spending priorities.

According to the Finance Ministry source, the IMF has conveyed strong reservations regarding Pakistan’s expanding defence outlay at a time when the country’s economic fundamentals remain weak. The lender has reportedly warned Islamabad that excessive military spending could undermine fiscal consolidation efforts and complicate Pakistan’s broader economic recovery programme.

Pakistan has remained heavily dependent on IMF bailout packages over the past few years to stabilise its economy and avoid sovereign default. The lender has repeatedly pressed Islamabad to widen its tax base, reduce non-essential expenditures and undertake structural reforms in order to restore macroeconomic stability.

The Finance Ministry is currently working on multiple proposals regarding the defence allocation before finalising the budget. With competing demands from the military establishment and the IMF, the upcoming federal budget is expected to reflect the difficult balancing act facing Prime Minister Shehbaz Sharif’s government as it attempts to maintain security commitments while satisfying international lenders and containing the country’s economic crisis.

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