Pakistan increases defence budget but gains offset by inflation

Inflation has heavily impacted Pakistan's real-term defence budget trends. (Janes Defence Budgets)

Pakistan has announced a 2024–25 defence budget of nearly PKR2.13 trillion (USD7.64 billion). The appropriation is a 14.5% increase over the revised defence budget for 2023–24 and an 18% increase over the original budget for that year, according to documents issued by the Ministry of Finance (MoF) on 13 June.

These gains are offset however by continuing economic challenges in the South Asian country including the declined value of its currency and continuing double-digit inflation.

The majority of funding in the defence budget is allocated to Defence Services, which receives PKR2.12 trillion in 2024–25. A Defence Administration appropriation receives the remainder, about PKR6.7 billion.

The Defence Services allocation for 2024–25 includes employee-related expenses of PKR815.2 billion, a 11% increase over the revised 2023–24 allocation, and expenses for physical assets, which receives PKR548.6 billion, an increase of 18%.

Other appropriations under Defence Services consist of operating expenses of PKR513.3 billion, an increase of 14%, and civil works, which receives PKR244.8 billion, a rise of 20%.

A separate pensions appropriation in the federal budget provides PKR662 billion for the military. This is a 13.5% increase over the revised allocation for 2023–24, MoF documents show.

Another separate allocation is the Armed Forces Development Programme (AFDP), which is thought to augment military procurement. News reports in Pakistan said the AFDP would receive PKR402 billion in 2024–25.

In addition, Pakistan's state-run defence industrial enterprises receive PKR3.7 billion in the 2024–25 federal budget. The money supports the continued development of Pakistan's naval shipbuilding facilities, including those operated by Karachi Shipyard and Engineering Works (KSEW).

The Pakistan Armed Forces has made steps towards modernisation in 2024 supported by its primary defence supplier, China.