Govt to increase defence budget in FY 2025-26, confirms minister

Federal Minister for Planning Ahsan Iqbal has confirmed that Pakistan’s upcoming federal budget will include a hike in the defence allocation while also aiming to provide relief to the public.

He said the delay in the budget presentation is due to the prime minister’s foreign visit and Eid holidays, not due to pressure from the International Monetary Fund (IMF).

Speaking to engineers led by the Institution of Engineers Pakistan, Iqbal said water projects are being prioritised in light of regional tensions, with funding allocated for key hydroelectric initiatives like the Diamer-Bhasha Dam. He also announced a paid internship programme for young engineers.

Meanwhile, Pakistan and the IMF continued talks on the FY2026 budget. Discussions focused on income tax adjustments for salaried individuals, including proposals to reduce rates and raise the taxable ceiling. The IMF, however, expressed concerns over revenue gaps and rejected some relief proposals, seeking alternative measures such as adjustments in withholding taxes and capital gains tax.

The IMF acknowledged ongoing reforms and emphasized the need for a tight monetary policy, energy sector improvements, and broader economic sustainability.

Separately, World Bank Managing Director Anna Bjerde concluded a two-day visit, meeting top officials and reaffirming support for reforms focused on human capital, climate resilience, and private sector growth. She visited WB-supported sites in Sindh and highlighted continued collaboration under the 10-year Country Partnership Framework.