ISLAMABAD: The federal government has earmarked Rs3 trillion for defence in the upcoming fiscal year 2026-27, aiming to strengthen the country’s military capabilities and ensure national security, Finance Minister Muhammad Aurangzeb announced while presenting the budget in parliament on Friday.
He emphasized that a robust defence system is crucial to underpin economic resilience, noting Pakistan’s armed forces delivered a strong response to last year’s aggression by India. Aurangzeb highlighted the military operation “Bunyan-ul-Marsoos” as a landmark achievement in the nation’s defence history.
In a significant development, the finance minister mentioned Pakistan’s strategic agreement with Saudi Arabia, describing it as a major milestone that has drawn global attention to the country’s defence strength.
Aurangzeb also pointed out that despite challenges such as devastating floods and the ongoing US-Iran conflict, the government, under Prime Minister Shehbaz Sharif’s leadership, has successfully stabilized the economy.
He reported that Pakistan’s economic growth rate has reached 3.7 percent, with large-scale manufacturing expanding by 6.1 percent and the services sector growing by 4.1 percent—both figures marking a four-year peak. The overall economy now stands at 452 billion dollars, while per capita income has increased from 1,751 dollars last year to 1,901 dollars.
The finance minister further noted that the policy interest rate has been lowered from 22 percent to 11.5 percent over the last two years, reflecting improved macroeconomic stability. Remittances have surged to 38 billion dollars in the first 11 months of the fiscal year and are projected to surpass 41 billion dollars, setting a new record for the country.
Additionally, Aurangzeb stated that the tax-to-GDP ratio has risen by approximately 2 percentage points over three years, contributing to enhanced fiscal stability. He concluded by affirming that the budget incorporates ongoing reforms designed to maintain economic stability and promote sustained growth.
