ISLAMABAD: Defence budget during the following economical yr will remain constant as compared to the outgoing fiscal year in rupee terms due to the country’s dire economic condition. Prime Minister Imran Khan took to Twitter on the eve of Eidul Fitr to publicize that the army had “voluntarily agreed” to cut its expenditures due to “critical economic situation”. He noted the continuing “multiple security challenges” and pledged to spend the saved amount on growth and development of the erstwhile tribal areas, which have been joined into Khyber Pakhtunkhwa, and Balochistan.
Chief of the Military Staff Gen Qamar Bajwa, while discussing with troops during a visit to the Line of Control on Eid day, declared the armed forces were “foregoing routine boost in yearly defense budget”. The original budgetary allocation for the outgoing fiscal yr ( 2018-19 ) was Rs1 .1 trillion. The allocation made up 21 % of final year’s original budget outlay and 3 .2pc of gross domestic product ( GDP).
The actual expenditure incurred on defence this season will, however, be publicized by the finance ministry while laying the budget for the upcoming year ( 2019-20 ) before the National Assembly on June 11. The figure will, however, not give the finished image of the defense budget as it will not include Rs260 billion for a pension of retired soldiers, Rs45bn for security enhancement and undeclared allocations for major weapon procurements and strategic program. Although the fund’s figures will remain static, in reality, it will mean lesser available money for the troops due to the devaluation of the rupee and inflation; and hence it is being described as cut in defense expenditure.
Small information is officially available about the impact of the budget freeze that comes against the backdrop of the government’s contract with the International Monetary Fund ( IMF ) for a $6bn bailout package. The IMF, while introducing the staff-level contract final month, declared the upcoming budget would aim for a primary deficit of 0 .6pc of GDP. The primary deficit is expected to be little over 2pc during the outgoing fiscal yr ending on June 30. The IMF had said the reduction in deficit would be achieved through taxation measures, including the elimination of exemptions, curtailment of special treatments and development in the tax administration. It had, however, long been speculated by financial analysts that the govt would be forced to cut all expenditures, including defence spending.
Army sources say there will be no arms procurement during the following economical yr, expenditure on rations/TA&DA will be cut, overheads will be rationalized and there wouldn’t be pay increase for officers due to the freeze. Gen Bajwa in his interaction with troops on the LoC declared the impact would be managed by “tightening our belt” in areas where it did not affect operational capacity. “Irrespective of the voluntary cut in defence budget in the forthcoming financial yr, there shall be no impact on our response potential to all types of threat and quality of life of the soldiers,” he declared.