Pakistan’s Pakistan defence budget for the upcoming fiscal year will partly be supported through provincial contributions, Finance Minister Muhammad Aurangzeb announced during a post-budget press conference. He said grants provided by the provinces have helped the federal government address urgent financial requirements amid growing regional security concerns.
According to the finance minister, more than Rs1 trillion in provincial grants has been incorporated into the government’s fiscal planning. He explained that part of these funds has been reflected in the Pakistan defence budget, which was increased by 18% for the next financial year due to evolving security challenges.
Aurangzeb said the provincial contributions would not only support defence-related expenditures but also help create a fiscal cushion against inflationary pressures resulting from ongoing tensions in the Middle East. He warned that disruptions to energy infrastructure and uncertainty surrounding the Strait of Hormuz could affect economic conditions well into the next fiscal year.
The minister also confirmed that discussions with the International Monetary Fund (IMF) were continuing regarding several tax relief proposals included in the federal budget. While the government has proposed relief measures worth Rs360 billion, some measures are still under review following IMF concerns over their fiscal impact.
In a significant move aimed at addressing concerns of government employees, the federal cabinet approved relief measures exceeding Rs20 billion for civil servants. The package includes adjustments to pay structures, the merger of certain allowances into basic salaries, increases in conveyance allowances, and enhanced compensation for several departments and security institutions.
Aurangzeb reiterated the need to revisit the National Finance Commission (NFC) resource-sharing formula, arguing that the current population-based distribution system requires reform. He also assured that commitments made to Khyber-Pakhtunkhwa regarding merged districts would be honored.
Government officials described the budget as growth-oriented and supportive of salaried individuals, exporters, businesses, and the construction sector. While defending the Pakistan defence budget, ministers maintained that the broader financial plan aims to balance economic growth, national security, and public relief measures amid challenging regional and global conditions.
