Cash-Strapped Pakistan Hikes Defense Budget by 13 Percent

The Pakistani Armed Forces is due to receive a 13 percent funding increase in 2023-24 compared to the previous fiscal year, according to the defense budget revealed by Federal Finance Minister Ishaq Dar on Friday.

This upcoming year, $6.27 has been earmarked for the defense forces of the Islamic country, up from $5.54 billion in 2022-23.

Of the total, the Pakistan Army is set to pocket $2.87 billion, while the country's air force and navy are set to receive $1.28 billion and $656 million, respectively. The remaining amount of $1.96 billion will be used to pay the pensions of retired personnel.

The development comes amid a prolonged economic crisis in the country.

With just over $4 billion remaining in forex reserves, Pakistan is trying to secure loans from external creditors, including the International Monetary Fund (IMF), to avert a default.

At present, its foreign reserves are only enough to sustain about a month's imports.

Moreover, the Pakistani rupee is in freefall, plummeting to an all-time low of 300 against the US dollar last month.

Likewise, the country's inflation rate has touched record levels, rising to 37.97 percent in May, while the prices of gasoline and diesel have hit the ceiling, rubbing salt on the wounds of the nation's citizens who have been suffering from high food prices for months.

For several months, Pakistan has been trying to avoid bankruptcy, pleading with the IMF to release $1.1 billion from a stalled $6.5 billion loan program that expires at the end of this month.

Even though the two sides have held talks on many occasions, the IMF remained unconvinced about Pakistan's ability to pay the loan back, despite Islamabad securing guarantees from close allies China and the UAE.

Despite the IMF's reported apprehensions, Pakistan Prime Minister Sharif is hopeful to strike a deal with the multilateral agency soon.