Pakistan

Obama proposes $3.1b for Pakistan in 2012 budget

Administration's Pakistan spending broken into 'enduring core part' and the Overseas Contingency Operations.

February 15, 2011

WASHINGTON: The Obama administration has proposed $3.1 billion in the 2012 budget for US economic and security assistance and diplomatic operations in Pakistan, said a senior American official on Tuesday.

The administration's spending for Pakistan is broken into two parts, the "enduring core part" - meaning long-term assistance programs - and the Overseas Contingency Operations (OCO), an administration official said at a briefing on President Barack Obama's budget proposals for the fiscal year 2012, beginning October 1, 2011.

As part of the long-term economic and security assistance, President Obama is seeking $1.9 billion in the year 2012. The amount will also cover the cost of American aid operations and diplomatic presence.

Of the $1.9 billion, around $1.5 billion is annual money to be allocated under the Kerry-Lugar-Berman five-year aid measure.

It also includes $350 million in foreign military financing programs, which is part of the five-year agreement between the two countries.

Under the Kerry-Lugar-Berman initiative, the US funds a number of programs including development of democracy and wide-ranging infrastructure projects to assist Pakistan's economic progress.

On the OCO side of the budget, the administration has proposed $1.2 billion, out of which $146 million is for operational expenditure.

Under the OCO, $1.1 billion is to be devoted to the Pakistan Counterinsurgency Capability Fund (PCCF). The PCCF seeks to train Pakistani forces for a more effective fight against insurgents along the country's western border with Afghanistan.

COMMENTS (10)

John | 13 years ago | Reply @Amer: @Ali Adnan: @Peace On Earth: I would ask you to read the State Bank of Pakistan monetary policy report , Jan 2011 from it's website. I 'll summarize the report, here. PAK economy is very shaky. Despite the flood, the agricultural sector showed good rebound. Export in cotton textiles, and food brought revenue. Additional revenue came from foreign remittances(workers). After 5 years this is a good news as per SBP. $41 billions. The bad news is heavy Govt borrowing from SBP, which leaves little money for the banks to lend to private enterprises. The national debt to GDP stands alarmingly at high percentage. 90% of the investors buy the PAK treasury bonds for short term only (3 months) and PAK treasury pays more than 10% interest for this. What this means is that investors have little faith beyond 3 months. Long term T bonds are rejected so all planing are short term only. Despite increase money supply in circulation, banks do not see increase in deposits. Meaning people are spending more due to high inflation, so little money left for deposit. Private companies borrow from bank, but the industrial out put is very weak. Borrowed money is spent on importing raw materials at high prices, and acute shortage of electricity is blamed for poor industrial out put. Rising oil prices is an another factor. The Govt failure to implement the proposed tax on fuel, Lack of confidence due to Law and order, Govt continued borrowing, and circular debt (borrow money to pay for the money borrowed before) and others are all the cause. The KL bill money saved the country's finance and will continue to save it for a while. The PAK has a debt obligation to IMF ending in 2014, and $500 euro bond maturing in 2016 with 10% interest. All over the world countries are borrowing money at low interest rate, and India, china, brazil, and some African economies growing at 9% rate sucks the money out from international market. PAK economy is expected to grow at 2.9% max in 2011, with population growth of 1.5%. Meaning, actual growth rate is only 2.9-1.5= 1.4% but with inflation at 15%, it is stagnant growth as per IMF, but actually negative growth. What PAK needs for next 5 years right now is investor confidence in PAK, Improved Law and Order, measures in reducing Govt borrowing, investment in energy sector for electricity, and tax reform, reduce subsidy. All these measures require strong government, good understanding by people, reduction in monetary waste(corruption, reduce military and Govt spending) and structured workable tax based revenue collection. If PAK Govt stays on course on SBP recommendation, in 20 years PAK will have vibrant economy. All these protests against Govt initiatives for tax reform, and anti-America slogans are not going to help in attracting money into the system. The terrorism in Western border is a menace to PAK economy limiting your trade. Your eastern border is a gold mine for PAK economy, but PAK anti-India jargon does not help your macro economy. Currently only Farmers and truck drivers in Punjab benefit from local trade at eastern border region with India(micro economy). At present your agricultural export not the industrial out put, plus KL bill is keeping the economy going and may help in growing. All bets are off if the present Govt even appears shaky. If PAK president goes to Kuwait to ask for subsidized diesel(which now your navy is burning in navel exercise) and to increase the terms of credit and has to write an open letter in Washington Post on March 6 explaining his difficult position at home, when in US anti-PAK feeling is high, even among law makers who control the purse, then you should understand the situation. So be a responsible citizen, educate your peers, put money in PAK bank, listen to reasoning.

Amer | 13 years ago | Reply Can we please tell Obama that we don't want it????????? Can ALL the people in Pakistan come out on the streets and shut these political cronies up?????

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Arsalaan Haleem | 13 years ago | Reply I think this will be more than enough to buy Davis release.

Concerned Pakistani | 13 years ago | Reply @USINPAC - why do you have to spew hatred towards other nations? Would your time not be better served focusing on issues related to India (since you represent Indian interests in the United States)? You can come up with all kinds of excuses but I wonder if thoughts/actions such as what you displayed are really going to make this region a better place for everyone. As for the original news item, it may be a good idea for people in Pakistan to focus on education and acquiring skills that will help them in the 21st century. The aid package may help a bit but change always comes from within.

Asif | 13 years ago | Reply Why doesnt the ghairat brigade not ask people to pay taxes and its leader declare how much taxes they pay.

Ali Adnan | 13 years ago | Reply We need to forego this and look towards Reko Diq (worth 200 billion dollars) as honorable people !!! can we for once break the clutches of slavery ?? Puppet shows really look worse with the puppeteer in sights !!

Peace On Earth | 13 years ago | Reply If the Pakistani government had any pride in themselves, they would reject the aid from the USA. Sadly, Pakistanis in the Western world as well as the government pawns are used to accepting handouts and refuse to work hard like middle class Pakistanis today.

Humanity | 13 years ago | Reply Go party, nation, especially the ghairat brigade !!!

TightDhoti | 13 years ago | Reply Where is the Ghairat brigade demanding that as a soverign nation we should spurn US aid now!!?!?!

USINPAC | 13 years ago | Reply In spite of the ongoing standoff over the Raymond Davis affair, reports of Pakistan’s growing nuclear program with 100 deployed weapons and fourth plutonium reactor, and Pakistan’s failure to provide sufficient accounting of how US aid is being spent, the Obama administration has proposed $3.1 billion aid for 2012. The administration needs to have a very strong accountability mechanism in place for Pakistan before shelling out more money.

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