Pakistan unveils FY2027 budget with higher defence spending and ambitious revenue targets
The Pakistani government has presented its budget for the 2026–2027 fiscal year, outlining total expenditure of 18.77 trillion rupees (approximately $67.5 billion). The financial plan reflects the authorities’ efforts to maintain economic stability, meet commitments under the International Monetary Fund (IMF) programme and support growth while managing fiscal pressures.
The budget projects economic growth of 4% for the coming fiscal year and forecasts inflation at 8.2%. Officials believe these targets can be achieved through continued economic reforms, improved revenue collection and prudent fiscal management.
One of the most notable aspects of the budget is the increase in defence spending. The government has allocated 3 trillion rupees to the defence sector, representing an 18% rise compared with the previous fiscal year. The increase comes amid ongoing regional security concerns and follows a period of heightened tensions in South Asia.
At the same time, development spending has been restrained as authorities seek to control public finances. The government has set an ambitious total revenue target of 20.60 trillion rupees, including projected tax revenues of 15.26 trillion rupees.
The budget also aims to achieve a primary surplus equivalent to 2% of gross domestic product (GDP), while the fiscal deficit is expected to reach 3.6% of GDP. Policymakers view these objectives as essential to maintaining investor confidence and strengthening the country's financial position.
However, external risks remain. Rising global oil prices are expected to place additional pressure on public finances, with government estimates suggesting that higher energy costs could add around 0.8% of GDP to the fiscal deficit during FY2027.
As Pakistan navigates economic challenges and fiscal reforms, the success of the new budget will largely depend on revenue collection, inflation control and the broader international economic environment.
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