Debt servicing and defence spending dominate Pakistan’s expenditures

Pakistan’s debt servicing and defence expenditures remained significantly higher than development spending during the first nine months of fiscal year 2025-26, according to a new financial report issued by the Ministry of Finance Pakistan.

The report revealed that the government continued to face difficulties in fully reconciling revenue and expenditure figures, leading to a sharp rise in the statistical discrepancy recorded during the period. The gap increased to Rs444 billion in the first nine months of the current fiscal year compared to Rs205.69 billion during the same period of the previous year.

Among the provinces, Punjab recorded the highest discrepancy at Rs246.62 billion. Khyber Pakhtunkhwa followed with Rs111.918 billion, while Balochistan reported Rs104.327 billion and Sindh recorded Rs39.939 billion.

The report highlighted that federal expenditures remained heavily concentrated in three major areas: debt servicing, defence, and development programmes.

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Debt servicing accounted for the largest share of government spending, reaching nearly Rs4.95 trillion during the reviewed period. Analysts say the rising burden reflects Pakistan’s ongoing challenges related to domestic and external borrowing obligations.

Defence expenditures stood at approximately Rs1.689 trillion, making it the second-largest area of federal spending. In contrast, allocations for development projects remained comparatively lower despite the country’s growing infrastructure and public welfare needs.

Economists warn that high debt repayments continue to limit the government’s fiscal space for investment in social services, infrastructure, education, and economic development initiatives.

The widening statistical gap in public accounts has also raised concerns among financial experts regarding transparency and consistency in fiscal reporting at both federal and provincial levels.

The latest figures come as Pakistan continues efforts to stabilize its economy through fiscal reforms, expenditure controls, and international financial support arrangements.