Pakistan eyes PKR 100 billion defence hike in IMF-linked budget

The article reporting these details was published at 12:10 pm IST on May 16, 2026.

An IMF staff mission remains in Pakistan to finalise budget proposals before the 2026-27 budget is presented to the cabinet and parliament early next month.

The IMF staff report notes that, apart from those living in absolute poverty and receiving social income support, around 40% of Pakistan's population remains economically vulnerable.

The government undertakes not to introduce new incentives for special economic zones, export processing zones, and special technology zones, while phasing out existing incentives by 2035 to create a level playing field.

As part of IMF-linked reforms, the government will identify the 10 top corruption-prone institutions by the end of the year for detailed analysis and audit; provincial anti-corruption agencies are to be strengthened.

Pakistan committed to increasing the combined expenditure of the federal and provincial governments by 0.2% of GDP to PKR 4.227 trillion, and to digitise all federal and provincial government payments by June 2027.

IMF staff report projects total federal revenues for 2026-27 at PKR 17.144 trillion, a rise of about PKR 2 trillion and a 13.5% increase over the current year.

Defence expenditure for 2026-27 is estimated at PKR 2.665 trillion, up from PKR 2.564 trillion in the current year, implying an approximate PKR 100 billion increase.

An IMF staff report was issued following the completion of the third review of the $7 billion Extended Fund Facility (EFF) and the second review of the $1.4 billion Resilience and Sustainability Facility (RSF), informing the ensuing budget proposals.