Budget paper: Extra billions given to army acknowledged

Rs200b annual burden likely to be passed on to taxpayers.

ISLAMABAD: After years of keeping it under wraps, the outgoing government has finally admitted to releasing an annual grant of around Rs200 billion to the armed forces, the burden of which is likely to be passed on to taxpayers from next year.

In its budget strategy paper – a document encompassing this year’s revised budget estimates and projection for the next three years – the Pakistan Peoples Party-led coalition government conceded that it was paying the annual grant in security-relating spending, which was earlier largely financed out of the Coalition Support Fund (CSF).

The government had never accepted releasing the amount in the past despite repeated reports in the media.

The documents further stated that from 2009 to the current fiscal year, a whopping sum of Rs687 billion was given to the armed forces under the head of security-related spending. The highest payment was made in fiscal year 2009-10 with Rs215 billion given to the forces.

Much of the additional grant was paid out of the Coalition Support Fund (CSF) reimbursements by the US. During the current fiscal year, the US has reimbursed $1.9 billion.

For the next fiscal year 2013-14, commencing from July this year, and till 2016, authorities have estimated Rs190 billion in annual security-related expenses. However, Planning Commission Deputy Chairman Dr Nadeemul Haque suggested adding the grant in the regular defence budget once the CSF facility exhausts.

In his comments on the three-year strategy paper, Dr Haque wrote that “security-related spending is stagnant at around Rs190 billion whereas it has gone up from Rs122 billion in fiscal year 2012 to Rs185 billion and then remained stagnant at Rs190 billion for the next three years”.

He said the amount was consistent with reimbursements under the CSF which is going to exhaust in fiscal year 2014.

However, it is yet to be seen whether the finance ministry adds the spending in the regular defence budget or keep financing it as a separate item.

The strategy paper also increased this year’s defence budget to Rs570 billion – an addition of Rs25 billion over the budget approved by parliament in June last year.

By only adding the security-related spending and the supplementary budget, the stated defence budget has peaked to Rs755 billion.

Furthermore, the services fees from the United Nations on account of military personnel involved in peacekeeping missions, which is estimated at Rs30 billion for this year and over Rs100 billion for military pensions, the accumulative defence spending crosses Rs880 billion.

Next year

For the next year, the proposed defence budget stands at Rs627 billion –an increase of 10%, or Rs57 billion, over this year’s revised budget, according to official documents. Similarly, Rs190 billion will be released for security-related spending, Rs120 billion for military pensions and at least Rs30 billion of the UN peacekeeping mission reimbursements. The proposed accumulative defence spending adds up to Rs970 billion or roughly 30% of the next year’s proposed budget.

Published in The Express Tribune, March 20^th, 2013.