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Health Budget 2025-26: A Self-Perpetuating Crisis in Making

Pakistan’s 2025–26 federal budget cuts the health allocation by 16%, trading short-term fiscal relief for long-term economic and social costs.

Pakistan’s economic challenges demand difficult decisions that balance immediate fiscal needs against long-term development goals. The proposed 2025–26 federal budget prioritizes short-term stability, but this comes at the expense of critical health-sector investments. While fiscal prudence is necessary, neglecting healthcare risks creating larger economic and social costs down the line—truly a “penny wise, pound foolish” approach.

The upcoming health budget has been set at PKR 46.10 billion—a 16% reduction from last year’s PKR 54.87 billion allocation—resulting in an PKR 8.77 billion cut. No new health schemes appear in the Public Sector Development Program (PSDP) for FY2025–26. Amid rising costs and inflation, this cut threatens patient access, infrastructure maintenance, and workforce capacity.

Prioritizing fiscal discipline is understandable: Pakistan faces mounting debt, persistent current-account deficits, and high inflation, all under IMF and other lender conditions demanding strict monetary control. Yet the health sector already bears the brunt of austerity through reduced public-health programs, underfunded infrastructure, personnel shortages, and shortages of essential medicines and equipment. Short-term relief to the treasury ignores the negative externalities that will follow.

Neglecting healthcare carries profound economic risks. Under-investment in preventive care, immunization, and public-health initiatives will increase preventable diseases, triggering costly emergency responses and long-term treatment burdens. Chronic, unmanaged illnesses strain hospitals and drive up future spending—ultimately exceeding any upfront savings.

Nearly 40% of Pakistani children are stunted, impairing cognitive development and future earnings. The World Bank estimates Pakistan loses up to 4% of its GDP annually to malnutrition. Without robust nutrition and healthcare programs, labor productivity will remain low. Meanwhile, inadequate health infrastructure drives skilled medical professionals abroad, exacerbating domestic shortages.

The indirect costs are equally severe. Illness reduces workforce participation and efficiency, leading to higher absenteeism in schools and workplaces. A less productive population slows economic growth, diminishes industrial output, and weakens Pakistan’s global competitiveness. Moreover, catastrophic health expenses push millions below the poverty line, undermining the very fiscal objectives the budget seeks to achieve.

Health and education are intertwined: malnourished or chronically ill children struggle in school, compromising cognitive development and increasing dropout rates. A sick workforce lacks the stamina for skilled labor, innovation, and entrepreneurship. In today’s knowledge economy, a healthy, educated population is the cornerstone of sustained growth. Sacrificing health investments today undermines human-capital formation and long-term prosperity.

To avert a self-perpetuating crisis, Pakistan must raise its health budget from less than 1% of GDP to at least 2.5%. This increase would improve healthcare infrastructure, maternal and child health, and disease control. While the WHO recommends a 5% GDP allocation for health, regional peers offer guidance: India invests 3% and Bangladesh 2.5%. Matching or exceeding these benchmarks is vital for national well-being.

Expanding financial protection for low-income families is also critical. Beyond schemes like the Sehat Card, Pakistan should promote Takaful—Sharia-compliant insurance—to align with cultural values and broaden coverage for vulnerable households.

If the 2025–26 budget sacrifices health-sector development for short-term stability, Pakistan risks charting a hazardous course. Immediate savings will be nullified by rising healthcare demands, reduced productivity, and stalled human-capital growth—ultimately imposing far greater economic costs.

The writer is a Clinical Professor in Operative Dentistry and currently serves as the Dean of the Faculty of Dentistry at Baqai Medical University, Karachi. With over 45 years of experience in clinical dentistry and 34 years in dental education, he has authored more than 100 scientific publications, including editorials, case reports, and original research papers in nationally and internationally indexed journals.

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