Despite soaring debt signal in Economic Survey, Pakistan defence budget may shoot

Laden with an ever-increasing external debt that has reached $87.4 billion, Pakistan is spending over 1.9% of its gross domestic product (GDP) in debt service payments, with the biggest single lender being China, the latest economic survey released by the Shehbaz Sharif government says.

Despite the mounting external debt, Pakistan is expected to sharply hike its defence spending in the upcoming budget. Last year too, Pakistan increased its defence budget by a whopping 16.4%, even as it was seeking a bailout deal from International Monetary Fund to avert a complete collapse of its economy. This time around, the increase is likely to be higher, given that IMF bailout has been secured and the country has faced significant damage to its airbases and air defence systems in the strikes carried out by India as part of Operation Sindoor.

Indian defence budget is pegged at 1.9% of its GDP, a number that New Delhi has kept in check, with defence spending not exceeding the 2% mark for years.


As per Pakistan's economic survey, it paid $7.8 billion in external debt service payments in the last financial year, with China getting just $602 million despite being the single largest lender, with outstanding loans worth over $15 billion.

China is the largest supplier of weapons to Pakistan, with almost 80% of its arsenal originating from Beijing. In the recent conflict with India, the majority of weapons used by Pakistan that included HQ9 surface-to-air missiles and J10 fighter jets were acquired on lenient terms from China.

Pakistan's total debt is pegged at $269 billion, with most of it being internal. On the external front, the country owes other nations and multilateral agencies nearly $87.4 billion.

Among bilateral lenders, the biggest amount is owed to China ($15 billion), followed by Japan at $3 billion and France at just over $1 billion. Among multilateral lenders, Pakistan owes $18 billion to IDA and $16 billion to ADB.