Freeze on defence budget: Army’s decision to give govt fiscal space

ISLAMABAD: The freezing of defence spending in budget 2019-20 at the level of outgoing fiscal year will create a cushion to utilise resources on the merged districts of tribal areas and

development needs of other areas. On the civilian side, the government is taking a decision with regard to increase in the salaries of bureaucrats from grades 17 to 22.

Another option under consideration is to grant an increase of 5 to 7.5 percent for grades 17 to 19 and no increase for grade 20 to 22, while the salaries of employees from 1 to 16 will be increased by 10 percent. Pension may be increased by 10 percent.

The Pakistan Army’s decision was conveyed during a high-level meeting at Banigala just ahead of Eidul Fitr with Prime Minister Imran Khan in the chair. “The fiscal cushion created with the voluntary initiative of army will not result into a cut in the budget deficit but will create fiscal space to utilise resources on tribal areas, Balochistan and development requirements under the Public Sector Development Program (PSDP) for the next budget,” top official sources confirmed to The News on Friday.

The defence spending coupled with the military’s development plan allocation would be standing at around Rs1.1 to Rs1.2 trillion in the next budget. Debt servicing would consume a major chunk of resources and eat up around Rs2.7 trillion in the next budget.

For subsidies, the government has decided to grant Rs217 billion for the power sector. For BISP, Bait-ul-Mal and Zakat program an allocation of Rs190 billion would be made in the next budget. The subsidy for GB, AJK and wheat would continue in the coming budget.

Prime Minister Imran Khan had stated in his tweet, “I appreciate the Pak Military's unprecedented voluntary initiative of stringent cuts in their defence expenditures for next FY because of our critical financial situation, despite multiple security challenges. My govt will spend this money saved on development of merged tribal areas & Balochistan.”

The DG ISPR quoted the army chief as stating that “Foregoing routine including in annual defense budget is not a favor to the nation as we are one, through thick & thin. There shall be no impact on our response potential to any threat & quality of life of soldiers. No pay raise decision is also only for the officers & not for the soldiers”.

Director General ISPR Maj Gen Asif Ghafoor stated in his tweets that the Indian fake media was busy spinning on our internal defence budgeting choice. Don’t forget, we were the same forces with same budget on 27 Feb 19. We have the capability & capacity to respond. Remember, it’s not budgeting, it’s resolve of force & the nation firmly standing behind its force.

“Voluntary cut in defence budget for a year will not be at the cost of defence & security. We shall maintain an effective response potential to all threats. Three services will manage impact of the cut through appropriate internal measures. It was imp to participate in development of tribal areas & Balochistan,” he added.

When this reporter contacted Dr Khaqan Najeeb, spokesman for the Finance Ministry, he said exceptional efforts by all institutions to limit expenditures in the coming budget will strengthen the government’s effort to ensure financial austerity. Combined efforts will ensure financial discipline, reduce the crucial fiscal deficit and expedite economic recovery.

Meanwhile, Prime minister Imran Khan says the armed forces have agreed to defence cuts and not to enhance defence expenditure for the next fiscal year despite "multiple security challenges".

In a tweet, Khan maintained that the money would be used to aid the development of merged tribal areas and Balochistan. In February last, the government had announced not to cut the defence budget. The then Information and Broadcasting Minister Fawad Chaudhary reminded the nation that the defence budget was already low compared to other states in the region, and therefore it should be increased.

“We want to increase our defence and security; therefore, we need to increase our defence budget and for that purpose we want to generate more revenue,” he said. Last month, however, the government promised that all civil and military institutions would contribute to the austerity-oriented federal budget for 2019-20.

“There will be austerity in the coming budget. We will try to keep government expenditures to the minimum possible level,” Prime Minister’s Adviser on Finance and Economic Affairs Dr Hafeez Shaikh had said.

The military spending of 2018 made up four per cent of Pakistan's gross domestic product (GDP) which is the highest level since 2004, according to the report by the Sweden-based institute.

The top military spender in the world is the United States, which spent $649 billion on its forces last year. The US military spending, however, has decreased by 17pc over the past decade, the report said.

It is followed by China (around $250bn), Saudi Arabia (around $67.6bn), India ($66.5bn) and France ($63.8bn). These five countries accounted for 60pc of the global military spending. According to the report, India's military spending, which rose by 3.1pc between 2017 and 2018 was "largely motivated by tensions and rivalry with Pakistan and China."

Despite increase from last year, India's military burden was the lowest since the 1960s and made up for 2.4pc of its GDP. Meanwhile, sources told The News that the decision of placing cut on the defence expenditures wouldn’t have any adverse impact on the capability and capacity of the armed forces in defence of motherland. The appreciation of the situation by the armed forces is being hailed widely.