Defence ministry wants bigger slice of budget pie

Says current indicative budget of Rs860b is insufficient

ISLAMABAD:

The Ministry of Defense has termed the indicative defence budget of Rs860 billion for next fiscal year insufficient, seeking its linkage with threat perception that it said was increasing due to current geo-political situation.

Against its current 60% share, the defence ministry also wants to take 100% of the Coalition Support Fund that the United States disburses in return for the country’s services against the war on terrorism. The remaining 40% goes to the federal government.



The defence ministry also sought one billion dollars annually for next eight years to develop Federally Administered Tribal Areas (FATA).

The defence ministry made its case for increase in budgetary allocations and a claim over 100% CSF payment while giving a briefing on mid-year review of defence budget to Senate Standing Committee on Defence on April 13. The Chairman Standing Committee, Senator Mushahid Hussain Sayed, presented the report to the upper house of Parliament on Wednesday.



For the current fiscal year 2015-16, the government has originally approved Rs781 billion for the three armed forces. The Ministry of Finance has proposed Rs860 billion for new fiscal year 2016-17, beginning from July. The proposed budget is one-tenth or Rs79 billion higher than this year’s allocation.

However, the defence ministry has sought Rs920 billion – Rs139 billion or roughly 18% higher than this year’s budget. The Rs920 billion demand is only for meeting the needs of the armed forces. The allocations for defence procurements are over and above this amount. The finance ministry was not immediately in a position to respond to these demands. Early this month, Finance Minister Ishaq Dar had met the army chief to discuss the military’s budgetary requirements.

The report states that the defence ministry has demanded that the budgetary allocations of three armed forces should be linked with the threat perception. The defence ministry said that the threat perception has “markedly enhanced due to the current geo-political situation and Pakistan’s strategic location in the area,” according to the report.



The defence ministry also made a claim over 100% of the CSF, according to the committee’s report. “The 40% deduction from the CSF reimbursements by government of Pakistan may be discontinued,” the ministry proposed to the parliamentary body.

Under a formula agreed under Pervez Musharraf’s regime, 40% of the CSF receipts go to the civilian government. So far, Pakistan has received $13 billion from the US. The ministry of defence informed the committee that it is the last year of the CSF arrangement and the US has yet to disburse $200 million.

The report also reveals that during the recent meeting of Pak-US Strategic Dialogue, Pakistan proposed establishing a border management fund worth $100 million. It claimed that the US government has agreed that a robust border management is essential for maintenance of peace on Pak-Afghan border and further negotiations on the matter would continue.

The defence ministry also proposed to the US authorities that $8 billion were required over a period of next five to eight years for the development of FATA, according to the report.

It has also demanded that sales tax and customs duties that the government of Pakistan charges on defence imports should be waived off. The National Logistic Cell and Frontier Works Organisation are already exempted from payments of income tax.

In yet another demand, the defence ministry said that the powers to waive off austerity measures of defence organisations should be given to the secretary defence by taking it from secretary finance.

The ministry has also sought preferential treatment in pensions and said that there should be one rank-one pension formula for the defence services. It has also proposed that a Pay and Pension Commission may be constituted for addressing the issues of increase in salaries.

Published in The Express Tribune, April 21^st,  2016.