Pakistan dumps 118 projects worth PKR 1,000 billion to please IMF, but set to raise military spending by 18%

In a telling sign of Pakistan’s deepening fiscal distress and misplaced priorities, the government in Islamabad has decided to scrap as many as 118 developmental projects valued at Rs 1,000 billion (PKR) from the upcoming 2025-26 Budget, according to local media in the neighbouring country. The move coincides with a planned 18% increase in defence spending, which comes after Islamabad faced embarrassment at the hands of India in the recent military conflict.

With only PKR 880 billion set aside for the Public Sector Development Programme (PSDP), the Shehbaz Sharif-led administration is under fire for prioritising the military over critical civilian needs in a time of economic crisis.

The move comes ahead of the budget announcement on June 10, amid intense pressure from the International Monetary Fund (IMF) to cut spending and raise revenues.

The original Rs 1,000 billion (PKR) budget was cut after PM Shehbaz Sharif allocated Rs 120 billion for upgrading the N-25 Highway in Balochistan. This left only Rs 880 billion for public sector development projects.

After facing embarrassment at the hands of New Delhi when Indian Armed Forces launched destructive strikes on its air bases last month, Islamabad is set to increase its defence budget to 18% this time, despite the fact that its economy continues to remain paralyzed.

Even its once-thriving textile industry now suffers from energy shortages, lack of innovation, and loss of export competitiveness. With poor education and health indicators, Pakistan's human capital remains underdeveloped. Public debt has crossed 80% of GDP, and the country is frequently in danger of sovereign default.

At a time when Pakistan is negotiating with China over CPEC Phase II, trying to attract Gulf investment, and fending off international criticism over terror sanctuaries, this internal budget misalignment signals confusion and instability.