Pakistan – Page 6 – Air Marshal's Perspective

August 4, 2025August 3, 2025

714: PAKISTAN’S SOARING DEFENCE BUDGET: BULLETS FROM BORROWED MONEY

My Article published on the IIRF website on 02 Aug 25.

On June 10, 2025, Pakistan’s Finance Minister Muhammad Aurangzeb announced the national budget for the fiscal year 2025-26, revealing a notable 20.4% increase in defence expenditure, the highest in ten years. The budget allocation for the nation’s armed forces increased to 2.55 trillion rupees (equivalent to $9 billion), up from 2.12 trillion rupees in the preceding fiscal year. This increment constitutes 1.97% of Pakistan’s gross domestic product (GDP), compared to 1.7% in the previous year. The rise in defence spending prompts inquiries regarding its funding sources, economic trade-offs, and broader implications for Pakistan’s fiscal stability and geopolitical strategy.

Funding the Defence Budget Hike

The defence allocation of 2.55 trillion rupees, supplemented by an additional 742 billion rupees (equivalent to $2.63 billion) designated for military pensions, results in a total military expenditure of 3.292 trillion rupees (approximately $11.67 billion). This escalation occurs amidst a context of a 6.9% contraction in the overall federal budget, which decreased from 18.9 trillion rupees to 17.57 trillion rupees (about $62 billion). To accommodate this increase in defence spending, Pakistan is employing a combination of tax revenue, non-tax revenue, borrowing, and reallocation of resources from other sectors, managing to stay somehow within the framework of fiscal constraints imposed under an International Monetary Fund (IMF) program.

Tax Revenue: The Ordinary Citizen Pays. The principal source of funding for the defence budget is an assertive tax collection target. The 2025-26 budget anticipates total gross revenue of 19.298 trillion rupees, with 14.131 trillion rupees expected from the Federal Board of Revenue (FBR). This signifies a 19% increase from the revised 12.33 trillion rupees collected in the preceding fiscal year. The government aims to achieve a tax-to-GDP ratio of 11.4%, up from 9.5%, by expanding the tax base and improving compliance. Essential measures encompass taxing agricultural incomes, augmenting levies on salaried individuals, and imposing higher taxes on retailers and exporters. Nevertheless, Pakistan’s sluggish economic growth, estimated at 3.5% for 2025-26, casts doubt on the achievability of this target.

Non-Tax Revenue: State–owned and Private Enterprises Contribute. Non-tax revenue, projected at 5.167 trillion rupees, constitutes a significant component of fiscal income. This includes proceeds from privatisation (87 billion rupees), dividends from state-owned enterprises, and various other sources, such as regulatory fees. Although these funds do not directly target defence expenditures, they augment the overall revenue pool, thereby enhancing the government’s capacity to allocate additional resources to the military. Nonetheless, privatisation initiatives have historically yielded limited results, and dependence on non-tax revenue remains a precarious strategy amid Pakistan’s economic volatility.

Borrowing for Bullets. The budget projects a fiscal deficit of 6.5 trillion rupees (approximately $23 billion), representing 3.9% of Gross Domestic Product (GDP), a decrease from 5.9% in the preceding year. This deficit will be financed through both domestic and external borrowing, including commercial loans and multilateral assistance. Domestic borrowing, primarily via government bonds, is anticipated to cover a substantial portion. Concurrently, external loans from entities such as the International Monetary Fund (IMF) and friendly nations, including China and Saudi Arabia, will also contribute. The escalation in defence expenditure, coupled with a 24% increase in debt servicing costs amounting to 8.8 trillion rupees, highlights Pakistan’s significant dependence on borrowing. Such an approach poses risks of exacerbating the country’s debt burden, which, according to IMF estimates, already accounts for approximately 90% of the country’s GDP.

Reallocation from Social Sectors: At The Cost of Development. To accommodate the defence hike, the government has significantly reduced expenditures in critical social sectors. The federal budget allocated for health was decreased to 32 billion rupees, and education received a mere 113 billion rupees, reflecting a 7% overall reduction in development expenditure. These reductions have elicited widespread criticism, particularly in rural regions where healthcare and educational infrastructure are already under significant strain. By prioritising defence over development, Pakistan is redirecting resources away from long-term growth drivers, thereby potentially aggravating socio-economic inequalities.

IMF Program and Fiscal Discipline: Spending on Defence but Borrowing for Essentials. Pakistan’s economy operates under an IMF Extended Fund Facility, which imposes strict fiscal targets, including a primary surplus of 1.6% of GDP. While IMF funds are not directly allocated to defence, they stabilise the economy by supporting the balance of payments and stabilising the Pakistani rupee. This stability allows the government to redirect domestic resources to military spending. However, the IMF’s emphasis on fiscal consolidation limits Pakistan’s ability to expand social spending, forcing trade-offs that favour defence. The government’s commitment to meeting IMF conditions, such as reducing subsidies and increasing taxes, further constrains its fiscal flexibility.

Implications of the Defence Surge

The significant increase in defence spending has far-reaching implications for Pakistan’s economy, society, and regional standing.

Economic Trade-Offs: Vicious Cycle. The prioritisation of defence over social sectors risks undermining Pakistan’s long-term financial stability. Reduced investment in health and education could exacerbate poverty and illiteracy, which already affect 40% and 43% of the population, respectively, according to World Bank data. The reliance on borrowing to finance the fiscal deficit, including defence spending, increases Pakistan’s debt servicing burden, which now consumes nearly 50% of the budget. This could lead to a vicious cycle of borrowing and repayment, limiting fiscal space for future development. Moreover, the ambitious tax targets may strain businesses and households, potentially stifling economic growth. Higher taxes on salaried workers and retailers could exacerbate inflation, a persistent issue with annual rates of 9-12%. If tax collection falls short, the government may resort to further borrowing or austerity measures, both of which could destabilise the economy.

Geopolitical Context: Regional Arms Race. The increase in the defence budget is a direct response to heightened tensions with India. Pakistan’s military assesses the necessity of strengthening its capabilities to counter India’s superior defence expenditures, projected to reach $80 billion by 2025. Nonetheless, this escalation poses the risk of intensifying an arms race in South Asia, which may further strain Pakistan’s economy and divert resources from essential domestic priorities.

Social and Political Ramifications: Political Instability and Tension. The budget’s focus on defence at the expense of social services has sparked public discontent in Pakistan. Critics argue that neglecting health and education undermines human capital development, critical for Pakistan’s young and growing population. Political opposition parties, including the Pakistan Tehreek-e-Insaf, have capitalised on this, accusing the government of prioritising military interests over public welfare. This could exacerbate political instability, a concern already present in Pakistan’s history of civil-military tensions.

International Relations and IMF Oversight: External Debt Vulnerabilities. The defence hike may complicate Pakistan’s relations with the IMF and other international partners. While the IMF does not directly dictate defence spending, its focus on fiscal discipline could lead to scrutiny of Pakistan’s budgetary priorities. Friendly nations like China, which provide significant loans and investments, may support the defence increase due to their strategic interests in countering India. However, reliance on foreign loans risks deepening Pakistan’s external debt vulnerabilities.

Conclusion

Pakistan’s decision to augment defence expenditure by over 20% in the 2025-26 budget reflects its strategic imperatives amid tensions with India. Funded through increased taxes, non-tax revenue, borrowing, and reductions in social sectors, this increase underscores the government’s prioritisation of security over development. While the augmentation may enhance military capabilities, it entails considerable costs to economic stability and public welfare. The dependence on borrowing and ambitious fiscal targets, coupled with curtailed social spending, risks exacerbating poverty, inequality, and fiscal vulnerabilities. As Pakistan navigates these challenges, establishing a balance between defence requirements and economic and social priorities will be essential for ensuring long-term stability in a volatile region.

Please Add Value to the write-up with your views on the subject.

For regular updates, please register your email here:-

Subscribe

Link to the article on the website:-

PAKISTAN’S SOARING DEFENCE BUDGET: BULLETS FROM BORROWED MONEY by Air Mshl Anil Khosla (Retd)

References and credits

To all the online sites and channels.

Pics Courtesy: Internet

Disclaimer:

Information and data included in the blog are for educational & non-commercial purposes only and have been carefully adapted, excerpted, or edited from reliable and accurate sources. All copyrighted material belongs to respective owners and is provided only for wider dissemination.

References:-

1. Aurangzeb, Muhammad. “Federal Budget Speech 2025-26.” Government of Pakistan, Ministry of Finance, June 10, 2025.

2.International Monetary Fund (IMF). “Pakistan: 2023 Article IV Consultation and Request for an Arrangement Under the Extended Fund Facility.” IMF Country Report No. 23/260, July 2023.

3. World Bank. “Pakistan Economic Update: Macroeconomic Challenges and Outlook.” World Bank, October 2024.

4. Government of Pakistan, Ministry of Finance. “Budget in Brief 2025-26.” June 2025.

5. Stockholm International Peace Research Institute (SIPRI). “Military Expenditure Database: India.” SIPRI, 2024.

6. The Express Tribune. “Pakistan’s Defence Budget Jumps 20.4% Amid Tensions with India.” June 11, 2025.

7. Dawn News. “Budget 2025-26: Fiscal Deficit and Borrowing Challenges.” June 12, 2025.

8. Pakistan Bureau of Statistics. “Economic Indicators: Inflation and Exchange Rates.” June 2025.

9. Geo News. “Opposition Slams Budget for Neglecting Social Sectors.” June 15, 2025.

July 24, 2025

710: SHAHEEN-3 MISSILE TEST FAILURE: A WAKE-UP CALL FOR PAKISTAN’S MISSILE PROGRAM

My article was published on “The EurasianTimes” website

on 24 Jul 25.

On July 22, 2025, Pakistan’s ambitious ballistic missile program experienced a notable setback and its strategic defence landscape was jolted, by the high-profile failure of its Shaheen-3 ballistic missile test. The incident, occurring near civilian settlements and in dangerously proximity to a primary nuclear site, has drawn national and international attention, not only over the technical reliability of Pakistan’s missile program but also concerning the safety of local populations and the geopolitical stability of South Asia.

The Missile. The Shaheen-III, developed by Pakistan’s National Development Complex (NDC) in collaboration with the National Engineering and Scientific Commission (NESCOM), constitutes a fundamental component of the nation’s strategic defence capabilities. With an asserted range of 2,750 kilometers, this missile is engineered to carry both conventional and nuclear warheads, thereby ranking among Pakistan’s most sophisticated systems. Its development is regarded as a strategic response to India’s expanding missile capabilities, including the Agni series, and aims to maintain deterrence within the volatile security environment of South Asia. The missile’s capacity to reach targets over an extensive geographical area highlights its strategic importance.

The Incident. The Shaheen-3 was launched from the Dera Ghazi Khan region in Punjab. According to multiple credible reports, the missile deviated from its planned trajectory shortly after launch and crashed in the Matt area of Dera Bugti district in Balochistan. The impact site was alarmingly close, approximately 500 meters, to civilian settlements and within the vicinity of a significant nuclear facility. Residents reported a powerful explosion near the Loop Seharani Levies Station, which was heard 20–50 kilometers away. Shockwaves of concern rippled through nearby communities, leading to scenes of panic and evacuation as locals rushed to distance themselves from a potential disaster. Social media platforms circulated videos and messages depicting the chaos.

Local Reaction. Pakistan’s Inter-Services Public Relations (ISPR) issued a brief statement acknowledging the test but maintained that all safety standards were followed. The statement, however, lacked specifics about the cause of the failure or the environmental impact of the crash. This opacity has fuelled speculation and criticism, both domestically and internationally. Analysts point out that the absence of transparent reporting on such incidents undermines public confidence in Pakistan’s missile program and raises questions about the technical reliability of the Shaheen-III.

Safety and Security Concerns. The close call between the missile crash and a densely populated area, combined with the proximity to critical nuclear infrastructure, has highlighted serious safety and security vulnerabilities. Given Balochistan’s historical sensitivity due to both its restive population and strategic assets, the event stoked local and national anxieties about the risks associated with missile tests conducted in such areas. While there were no immediate reports of casualties, the potential for significant harm was evident. The magnitude of the blast, the risk of radioactive contamination, and the psychological fear instilled in the local population have all contributed to widespread condemnation and calls for more responsible test protocols.

Technical Reliability and Pattern of Failures. What makes this incident particularly concerning is its apparent repeat of past failures. Reports indicate that previous Shaheen-3 tests, including those in 2023, also resulted in accidents near nuclear or sensitive military infrastructure. This pattern of technical shortcomings raises fundamental questions over the actual operational reliability of Pakistan’s most far-reaching missile.

Reinforcement of US concerns. The timing of the failure is notably significant, occurring merely months after the United States imposed sanctions in December 2024 on entities associated with Pakistan’s ballistic missile program. The United States expressed concerns regarding proliferation risks and the potential for missile technology to destabilise the region. This unsuccessful test is likely to intensify these concerns, supplying additional argumentation to critics who contend that Pakistan’s missile development suffers from insufficient oversight and technical maturity.

Strategic Significance. The Shaheen-3 is considered a central pillar of Pakistan’s deterrence strategy, designed to ensure that all major cities in India and beyond are within striking distance. The reliability of such a strategic asset is therefore crucial, not merely for defence planners in Islamabad but also for regional actors who closely monitor each development as part of a delicate balance of power. Its recent failures have reignited debate over the safety of ongoing missile development and testing in densely inhabited or strategically sensitive regions. The risk of sparking a larger geopolitical crisis, either by accident or escalation, is heightened whenever flaws in command, control, or technical functioning come to light. The failure of the Shaheen-3 test not only undermines the credibility of this deterrence strategy but also raises questions about the effectiveness of Pakistan’s missile program.

The Shaheen-III test failure is likely to have far-reaching consequences. For Pakistan, it represents a setback in its quest for a credible deterrent against regional rivals. For the international community, it underscores the challenges of managing proliferation risks in a region marked by intense strategic competition. It serves as a stark reminder of the serious risks associated with the testing and deployment of advanced ballistic missile technology in volatile environments. It exposes both persistent technical challenges and deep-rooted concerns over transparency and public safety. The incident has reignited discussion on the necessity of responsible stewardship over strategic assets, especially those capable of influencing the delicate balance of peace and security in the region, highlighting the importance of the issue.

Please Add Value to the write-up with your views on the subject.

For regular updates, please register your email here:-

Subscribe

Link to the article on the website:-

“Shockwaves” In Balochistan As Pakistan’s Nuclear-Capable Missile Crashes Near Nuclear Site; Shaheen-III Failure Sparks Concerns

References and credits

To all the online sites and channels.

Pics Courtesy: Internet

Disclaimer:

References:-

1.News Reports & Regional Media Coverage, The Balochistan Post (July 23, 2025), “Missile crash incident near Dera Bugti triggers panic among locals”

2.Associated Press. (2024, December 20). U.S. Imposes Sanctions on Entities Linked to Pakistan’s Ballistic Missile Program.

3.Dawn News. (2025, July 23). Shaheen-III Missile Test Fails, Crashes in Dera Bugti. Dawn.

4.Inter-Services Public Relations (ISPR). (2025, July 22). Official Statement on Shaheen-III Test Launch.

5.Khan, A. (2025, July 23). Local Residents Report Tremors, Debris from Missile Crash in Balochistan. The News International.

July 22, 2025

708: CHINA-PAKISTAN-BANGLADESH ALLIANCE: COMPLICATING REGIONAL DYNAMICS

In recent years, the evolving geopolitical landscape of South Asia has been redefined by an emerging alignment among China, Pakistan, and Bangladesh. The growing convergence between these three countries, particularly under China’s Initiative, is reshaping regional dynamics and presenting new challenges to India and broader Indo-Pacific security arrangements.

China-Pakistan Relations. The China-Pakistan relationship, often described as an “all-weather friendship,” has been a cornerstone of regional geopolitics for decades. Rooted in shared strategic interests, particularly countering India, it has been institutionalised through defence cooperation, economic assistance, and infrastructural integration. It has been further deepened through initiatives like the China-Pakistan Economic Corridor (CPEC), a flagship project of China’s Belt and Road Initiative (BRI) launched in 2013, connecting China’s Xinjiang province to Pakistan’s Gwadar port on the Arabian Sea. This strategic partnership has been further solidified by China’s support for Pakistan’s nuclear program and military modernisation, with Pakistan acquiring 70–80% of its weapons from China over the past five years. China has also become Pakistan’s largest arms supplier and a crucial diplomatic ally at forums like the United Nations Security Council, where it has repeatedly shielded Pakistan from international scrutiny over terrorism-related issues.

Bangladesh’s Gradual Pivot. Bangladesh’s inclusion in this dynamic marks a shift, particularly following the ouster of Prime Minister Sheikh Hasina in July 2024. Hasina’s government maintained a balanced foreign policy, fostering close ties with India while engaging China economically. However, the interim government under Muhammad Yunus has pivoted toward closer relations with Beijing and Islamabad, driven by deteriorating India-Bangladesh ties and China’s proactive engagement. This shift was evident during Yunus’s March 2025 visit to China, where he positioned Bangladesh as a gateway for Chinese economic cooperation in the region, a move that strained relations with India. The motivations behind this convergence are multifaceted. For China, expanding influence in South Asia counters U.S.-India strategic alignment and secures access to the Bay of Bengal and Indian Ocean. Pakistan seeks to bolster its regional relevance. Bangladesh, navigating domestic political transitions, sees alignment with China and Pakistan as a means to secure economic and diplomatic support, particularly through BRI projects.

The Triangle Takes Shape. A pivotal development was the trilateral meeting in Kunming, China, on June 19, 2025, involving representatives from China, Pakistan, and Bangladesh. This “informal” consultation, hosted by China, focused on regional cooperation and connectivity, sparking speculation about a new regional bloc to replace SAARC. While Bangladesh’s interim government dismissed claims of a formal alliance, the meeting signaled a strategic intent to enhance collaboration among the three nations.

Implications for India. The proposed bloc poses a direct challenge to India. India’s concerns were heightened by comments from Bangladesh’s leadership, such as Yunus’s claim that Bangladesh is the “only guardian” of the Indian Ocean. India, finds itself encircled by Chinese-influenced states on nearly all fronts, Nepal to the north, Pakistan to the west, and Bangladesh and Myanmar to the east. From a maritime perspective, China’s presence in Gwadar (Pakistan) and Chittagong (Bangladesh) gives it a foothold in the Indian Ocean, threatening India’s naval supremacy and potentially undermining the U.S.-led Indo-Pacific strategy. The strategic alignment also threatens India’s northeastern states, especially the vulnerable Siliguri Corridor, which connects mainland India to its northeast.

Broader Geopolitical Ramifications. The China-Pakistan-Bangladesh convergence complicates the U.S.-China rivalry in the Indo-Pacific. The U.S., viewing China’s growing influence as a challenge to its regional strategy. This dynamic could intensify Sino-U.S. competition, with Bangladesh’s strategic choices shaping the regional balance of power. Smaller South Asian states, such as Nepal and Sri Lanka, may face pressure to align with either the China-Pakistan-Bangladesh bloc or India, complicating regional integration. The dormancy of SAARC, exacerbated by India’s boycott following the 2016 Uri attack, has created a vacuum that China seeks to fill, potentially reshaping South Asia’s geopolitical architecture.

Conclusion. The emerging China-Pakistan-Bangladesh alignment reflects a strategic realignment in South Asia, driven by shared economic and geopolitical interests. While not yet a formal alliance, this convergence challenges India’s regional dominance and complicates the Indo-Pacific strategic landscape. As China expands its influence through BRI and diplomatic engagements, India must navigate a complex dilemma, balancing regional influence with global partnerships. The future of South Asian stability hinges on how these dynamics evolve and whether a new regional bloc can foster cooperation without exacerbating tensions.

Please Add Value to the write-up with your views on the subject.

For regular updates, please register your email here:-

Subscribe

References and credits

To all the online sites and channels.

Pics Courtesy: Internet

Disclaimer:

References:-

Hindustan Times. “CDS Chauhan Says Convergence between China, Pakistan and Bangladesh Has Implications for Regional Stability.” July 9, 2025.2.
India Today. “To Counter India, China, Pakistan and Bangladesh Creating a Saarc-Replacement.” June 30, 2025.
The Hindu. “Bangladesh, Pakistan, China Hold Inaugural Trilateral Foreign Office Discussion.” June 20, 2025.
The Hindu. “Pakistan, China Working to Establish New Regional Bloc with Potential to Replace SAARC: Report.” June 30, 2025.
Modern Diplomacy. “Bangladesh-Pakistan Thaw and a Regional Realignment.” February 23, 2025.
South Asian Voices. “The Bangladesh-Pakistan-China Triangle and India’s Strategic Dilemma.” April 26, 2025.
The Express Tribune. “Ex-Bangladeshi General Urges China Alliance to Seize India’s Northeast If Pakistan Is Attacked.” May 3, 2025.
United States Institute of Peace. “China’s Influence on Conflict Dynamics in South Asia.” December 16, 2020