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Pakistan to hike defense spending, cut overall budget for 2025–26

In comparison, India has raised its 2025–26 defense budget to $78.7 billion, with $21 billion set aside for equipment.

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Pakistan is set to unveil its federal budget on Tuesday, projecting a 6.7% cut in total spending to 17.6 trillion rupees ($62.45 billion) for the 2025–26 fiscal year, while likely increasing defence expenditure by around 20% in the wake of last month’s conflict with India.

Officials expect a fiscal deficit of 4.8% of GDP, down from this year’s 5.9% target. Defence spending, currently at 2.1 trillion rupees ($7.45 billion), is expected to rise, mostly funded through cuts in development spending. 

An additional 563 billion rupees ($1.99 billion) for military pensions remains outside the official defence budget.

In comparison, India has raised its 2025–26 defence budget to $78.7 billion, with $21 billion set aside for equipment.

Pakistan’s economic growth for 2025–26 is projected at 4.2%, up from 2.7% this year, but still below regional averages. The government aims to maintain IMF compliance by expanding the tax base—particularly in agriculture and retail—and cutting subsidies. 

Just 1.3% of Pakistanis paid income tax in 2024, highlighting the scale of reform needed.

Finance Minister Muhammad Aurangzeb said the government is focused on sustaining macroeconomic stability and avoiding past “boom and bust” cycles.

However, analysts warn that IMF conditions and structural inefficiencies could hamper growth. S&P economist Ahmad Mobeen expects the revenue target to fall short due to poor implementation and lack of real tax reform.

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Saudi-led coalition intercepts missiles towards Riyadh, drones in Eastern Province

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The Saudi-led coalition fighting Yemen’s Iran-aligned Houthis said ​on Sunday it had intercepted two ‌Houthi ballistic missiles launched towards the Saudi capital Riyadh and three drones in ​the kingdom’s oil-rich Eastern Province.

The Houthis, ​who control most of the populous ⁠parts of Yemen, have intensified ​attacks on the Saudi capital in recent ​days. A Houthi attack last week damaged an administrative building of the state oil company Saudi ​Aramco in Riyadh’s financial hub, Reuters reported.

The ​Eastern Province, the economic powerhouse of Saudi Arabia, ‌has ⁠been subject to multiple attacks by Houthis in the past few weeks.

It contains the majority of the kingdom’s oil ​and gas ​reserves ⁠and is home to Aramco’s headquarters, which suffered extensive damage ​in an attack in October.

The ​Houthis ⁠have stepped up strikes on Saudi airports, ports and oil facilities, while ⁠Saudi ​Arabia has ramped up ​airstrikes on Houthi targets in Yemen in response.

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Saudi Arabia says debris from intercepted missiles falls in Mecca region

The missiles were launched towards the region and intercepted and destroyed, ​Saudi Arabia’s civil defence said in a statement.

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Saudi Arabia said debris from two ballistic missiles ​intercepted by its air defences fell in the Mecca ‌region on Wednesday, as the kingdom and Yemen’s Iran-aligned Houthis continued to trade attacks in an escalating conflict.

Saudi state television identified the locations as Sabuhah village, ​about 35 km (22 miles) northeast of the Grand Mosque in Mecca, ​and Wadi al-Maghmas, about 21 km east of the ⁠mosque, Reuters reported.

The missiles were launched towards the region and intercepted and destroyed, ​Saudi Arabia’s civil defence said in a statement.

The Houthis have repeatedly denied ​Saudi accusations that they target Mecca and Medina, Islam’s two holiest cities, saying their military operations are directed at military and strategic targets elsewhere in Saudi Arabia.

Mecca, ​home to sites sacred to Muslims worldwide, is the focal ​point of the annual hajj pilgrimage, one of the five pillars of Islam, which ‌millions ⁠of Muslims undertake each year.

“This hostile targeting of civilian objects constitutes a flagrant violation of international humanitarian law and reflects the dangerous hostile approach pursued by the Houthi militia,” Saudi Arabia’s civil defence said ​early on Thursday.

The ​Houthis seized ⁠Yemen’s capital Sanaa in 2014, prompting Saudi Arabia to intervene militarily the following year in support of ​the internationally recognised government.

A UN-brokered truce in 2022 largely ​froze ⁠the conflict, but hostilities resumed earlier this year, with the Houthis launching missile and drone attacks on Saudi territory and Riyadh carrying out airstrikes ⁠in ​Yemen.

The latest escalation has threatened the strategic Bab ​el-Mandeb Strait, a key shipping route linking the Red Sea and the Gulf of Aden.

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Iran defends two-day proposal for peace talks after US rejects conditions

Iran defended a proposal on Monday to restart peace talks in as ​few as two days as the ‌most reasonable offer on the table, after US Secretary of State Marco Rubio called some of ​Iran’s conditions “outrageous and ridiculous”.

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Iran defended a proposal on Monday to restart peace talks in as ​few as two days as the ‌most reasonable offer on the table, after US Secretary of State Marco Rubio called some of ​Iran’s conditions “outrageous and ridiculous”, Reuters reported.

“Is it unreasonable that ​Iran demands that US illegal sanctions ⁠and its naval blockade must be lifted ​before negotiations start and that the war should ​end on all fronts?” Foreign Ministry spokesman Esmaeil Baghaei told a weekly press conference in response to ​Rubio’s remarks.

Iran defended a proposal on Monday to restart peace talks in as ​few as two days as the ‌most reasonable offer on the table, after US Secretary of State Marco Rubio called some of ​Iran’s conditions “outrageous and ridiculous”.

“Is it unreasonable that ​Iran demands that US illegal sanctions ⁠and its naval blockade must be lifted ​before negotiations start and that the war should ​end on all fronts?” Foreign Ministry spokesman Esmaeil Baghaei told a weekly press conference in response to ​Rubio’s remarks.

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