Govt allocates Rs3 trillion for defence in new budget

ISLAMABAD: The government has allocated Rs3 trillion for defence in the new federal budget for the fiscal year 2026-27 to make the country “invincible,” Finance Minister Muhammad Aurangzeb said on Friday while presenting the budget in parliament.

He said that a strong defence was essential to support economic strength, adding that Pakistan’s armed forces had responded firmly to last year’s aggression by India.

He referred to “Bunyan-ul-Marsoos” as a key success in the country’s military history.

The finance minister said that Pakistan had also signed a strategic agreement with Saudi Arabia, calling it highly significant, and said the world had taken note of Pakistan’s defence capabilities.

Aurangzeb said that the government had achieved major economic stabilisation under the leadership of Prime Minister Shehbaz Sharif, despite floods and the US-Iran conflict.

He said Pakistan’s economic growth had reached 3.7 per cent, with large-scale manufacturing expanding by 6.1 per cent and the services sector growing by 4.1 per cent, both at a four-year high.

He said the size of the economy had reached 452 billion dollars, while per capita income had risen to 1,901 dollars from 1,751 dollars last year.

The finance minister said the policy rate had been reduced from 22 per cent to 11.5 per cent over the past two years, reflecting improved macroeconomic conditions.

He said remittances had surged to 38 billion dollars in the first 11 months of the fiscal year and were expected to exceed 41 billion dollars, the highest level in the country’s history.

Aurangzeb said tax-to-GDP ratios had increased by around 2 percentage points over three years, contributing to stronger fiscal stability.

He said the budget reflects continued reforms aimed at stabilising the economy and sustaining growth.