In June 2025, Finance Minister Muhammad Aurangzeb tabled Pakistan’s Rs17.57 trillion (~$62 billion) federal budget, marking a notable 7% reduction in overall spending from the previous fiscal year apnews.com+12reuters.com+12arabnews.com+12. Though the budget reflects austerity, it simultaneously ramps up defence spending, signaling complex trade-offs between national priorities.
Defence Spending Soars
- Allocation for defence sees an approximate 20% jump, from Rs2.12 trillion to Rs2.55 trillion (~$9 billion) reuters.com+1economictimes.indiatimes.com+1arabnews.com+2apnews.com+2ft.com+2.
- Driven by recent escalations with India and the need to “bolster military capabilities,” this rise cements defence as the top expenditure en.wikipedia.org+4arabnews.com+4ft.com+4.
Fiscal Discipline & IMF Alignment
- Total spending trimmed from Rs18.9 trillion to Rs17.57 trillion reflects deliberate efforts toward fiscal consolidation apnews.com+15reuters.com+15thenews.com.pk+15.
- Deficit projected to narrow from 5.9% to 3.9% of GDP, aligning with IMF‑mandated targets under the $7 billion Extended Fund Facility (EFF) dunyanews.tv+4reuters.com+4profit.pakistantoday.com.pk+4.
- IMF oversight shaped key reforms like widening the tax net, withdrawal of some subsidies, and austerity measures .
Tax Reforms & Revenue Push
- Aim to raise tax collection to Rs14.13 trillion, a jump of ~9% youtube.com+15arabnews.com+15arabnews.com+15.
- New taxes include digital levies on foreign vendors, increased withholding on passive incomes and bank deposits arabnews.com+1propakistani.pk+1.
- Expansion of the tax base into agriculture, retail, and real estate supports IMF growth-condusive agenda reuters.com.
Growth & Social Sector Outlook
- Growth target: 4.2% GDP, up from a meager 2.7% the previous year samaa.tv+5brecorder.com+5deccanherald.com+5.
- Emphasis on pro-market reforms: privatizations, governance improvements, energy sector rationalization reuters.com.
- Budget continues to under-invest in health and education—each remains below 1% of GDP en.wikipedia.org.
Political and Public Response
- Opposition parties, including PTI, decried the budget as “IMF‑influenced” and unfair to lower-income brackets thenews.com.pk.
- Critics argue prioritizing defence over health, education, climate resilience, and agriculture risks long-term human development reuters.com+3apnews.com+3timesofindia.indiatimes.com+3.