38% Inflation, Just $3 Billion In Reserves But Pakistan Still Splurging On Its Military

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Last Updated:May 26, 2025, 14:39 IST

Pakistan announced an 18% summation successful its 2025-26 defence fund to implicit Rs 2.5 lakh crore, contempt an economical situation and IMF pressure, citing information concerns.

Pakistan's national fund was delayed owed to Prime Minister Shehbaz Sharif's overseas travel and the Eid holidays. (AP/PTI)

In a determination that has raised eyebrows some domestically and abroad, Pakistan has announced an 18 percent summation successful its defence fund for the fiscal twelvemonth 2025-26, pushing subject expenditure beyond a staggering Rs 2.5 lakh crore (approximately $9 billion). The determination comes astatine a precarious infinitesimal for the country, arsenic it teeters nether the value of economical crisis, soaring inflation, and mounting unit from planetary lenders.

The defence fund hike, unveiled conscionable arsenic ostentation breaches 38 percent and overseas speech reserves dip beneath $3 billion, has ignited aggravated statement implicit Pakistan’s fiscal priorities. Pakistan remains successful the grip of a fragile International Monetary Fund (IMF) programme, which has urged the state to rein successful non-essential spending and summation transparency.

Yet, the Pakistani authorities has justified the subject splurge citing heightened information concerns, peculiarly successful the aftermath of the caller violent onslaught successful Pahalgam, Jammu and Kashmir, successful April, and an uptick successful cross-border skirmishes with India on the Line of Control (LoC). Officials reason that these developments necessitated the bolstered subject preparedness.

Pakistan’s debt-to-GDP ratio stands adjacent 70%, with a commercialized shortage of $25 cardinal successful 2024 and constricted import cover. The IMF’s $7 cardinal bailout programme imposes strict fiscal controls, and analysts suggest that the accrued defence spending whitethorn complicate compliance with these conditions.

The national budget, primitively delayed owed to Prime Minister Shehbaz Sharif’s overseas travel and the Eid holidays, is wide believed to person been postponed to accommodate negotiations with the IMF. The money has consistently urged Islamabad to curtail “wasteful expenditures" and absorption connected gross procreation and societal information nets. However, the lion’s stock of authorities spending continues to beryllium directed toward subject and infrastructure projects.

One specified arguable inaugural is the Diamer-Bhasha Dam Project, a monolithic $14 cardinal hydroelectric endeavour being constructed successful the contested Gilgit-Baltistan portion connected the Indus River. Touted arsenic a strategical necessity, the dam is designed to make 4,500 megawatts of energy and store implicit 8 cardinal acre-feet of water. Yet, contempt years of effort, the task remains stalled – plagued by backing shortfalls, method hurdles, and geopolitical challenges.

This week, Pakistan’s Planning Minister Ahsan Iqbal escalated tensions further by accusing India of “water aggression", claiming that India’s upstream dam operation is depriving Pakistan of its stock of h2o resources. Iqbal declared the Diamer-Bhasha Dam a “strategic response", efficaciously framing it arsenic portion of a broader defence doctrine.

But the world is much sobering. With nary wide fiscal roadmap for completing the dam and dwindling overseas capitalist confidence, the feasibility of specified expansive infrastructure undertakings is progressively being questioned.

Economist Dr Kaiser Bengali warned that prioritising defence and large-scale infrastructure projects similar the Diamer-Bhasha Dam whitethorn undermine societal spending and hinder economical reforms, adversely affecting the wide colonisation of Pakistan.

The signs of strain are already disposable wrong the Pakistani population. With nutrient prices spiralling and substance costs skyrocketing, basal commodities person go unaffordable for many. Public assemblage salaries stay stagnant, unemployment is rising, and the acquisition fund has reportedly been slashed, adding to the frustrations of a colonisation grappling with 1 of the worst cost-of-living crises successful decades.

Hospitals are underfunded, schoolhouse systems are deteriorating, and energy shortages stay rampant. Yet, amid this crisis, billions are being earmarked for defence hardware and stalled mega-dams.

Economists caution that prioritising subject mightiness implicit economical betterment could deepen the nation’s fiscal hole. “Every rupee spent connected the subject is simply a rupee not spent connected food, medicine, oregon education," said an expert acquainted with Pakistan’s IMF negotiations.

Location :

Pakistan

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News world 38% Inflation, Just $3 Billion In Reserves But Pakistan Still Splurging On Its Military