Key takeaways
- Defence spending rose about 20% to Rs2.55 trillion while federal spending fell about 7%.
- Inflation fell from 38.5% (May 2023) to 4.1% (December 2024); rates fell from 22% to 11%.
- New investment deals include US$8.5 billion with China and US$500 million with a US firm.
- Mass surveillance and blocked websites weigh on the investment climate.
- Redirect interest savings to social spending in conflict-affected regions.
In this Minute Mirror column (September 2025), Dr. Ghulam Mohey-ud-din argues that Pakistan treats security and economic growth as competing priorities when they depend on each other.
The argument
The 2025-26 budget raised defence spending by about 20 percent, to Rs2.55 trillion, while total federal spending fell by about 7 percent. That squeezes the social services and infrastructure that conflict-affected communities need. Security operations, such as the 2024 operation in Bajaur that imposed curfews on 16 villages and reportedly displaced around 100,000 people, can bring gains but also generate grievances. Expanded digital surveillance, including large-scale monitoring of mobile connections and some 650,000 blocked websites, risks undermining investor confidence and civil liberties.
The economic picture has improved. Inflation fell from 38.5 percent in May 2023 to 4.1 percent by December 2024, the policy rate was cut from 22 to 11 percent, and household electricity tariffs were reduced by Rs7.41 per unit. New investment agreements, including US$8.5 billion with China and a US$500 million refining partnership with a US firm, signal appetite. But the 4.2 percent growth target rests on optimistic export and remittance assumptions that a security setback or oil shock could undo.
The column’s central point is legitimacy. Investors and citizens both value the rule of law and predictable governance; surveillance cannot substitute for institutional credibility.
What needs to change
- Intelligence-led counter-terrorism operations with explicit objectives and time limits.
- Channel savings from lower interest rates into social protection, health and infrastructure in affected regions.
- Tie foreign investment to local jobs and environmental standards.
- Replace mass monitoring with lawful, court-supervised intelligence gathering.