Additional Rs250 billion spent annually since launch of Operation Zarb-e-Azb

Centre, provinces at loggerheads over sharing security expenses

ISLAMABAD: The federal government claims it has been spending an additional Rs250 billion annually on security since the launch of Operation Zarb-e-Azb and that it cannot sustain the burden alone, but the two big provinces have already refused to share the cost.

In a position paper it has sent to the four federating units to convince them to pay for security, the National Finance Commission (NFC) Secretariat claimed that security-related additional spending stood at Rs732.4 billion since June 2014. This includes Rs283 billion allocations for the financial year 2016-17.



“Since 2014-15 alone, when new security operations started, the federal government has been spending some Rs300 billion specifically for meeting the expenditures related to security, rehabilitation and capacity-building of security forces to meet the challenges of law and order,” the finance ministry note stated.

However, the ministry’s claim that it was spending an additional Rs300 billion on security appears unrealistic, as more than half of the additional claimed expenses had been there even before the launch of Operation Zarb-e-Azb. It has shown contingent liabilities and miscellaneous grants as additional spending, which were already part of military spending.

In the last NFC meeting, Finance Minister Ishaq Dar had promised to share details of the additional security requirement with the provinces. The federal government had announced it would hold the next NFC meeting in the first week of January but has not yet convened it.

The ministry’s note added that the federal government was left with inadequate resources to fulfill its responsibilities related to defence, foreign debt, internal security and investment in critical projects after the last NFC award that resulted in an increase in the share of the provinces in the federal divisible pool.

In the last award that expired in June 2015, the share of the provinces in the federal divisible pool increased from 46.25% to 57.5%. However, in order to compensate the loss of revenues, it had been agreed that Pakistan’s tax-to-GDP ratio would be increased to 15%. This target could not be achieved, resulting in strain on the national kitty.

The federal government has long been aspiring to get back some of the financial resources that it transferred to the provinces by adopting an out-of-box approach, as under the Constitution it cannot reduce the provinces’ shares.

It has now recommended setting up a National Security Fund by allocating 3% of the divisible pool of taxes for meeting security-related expenses on the China-Pakistan Economic Corridor (CPEC) and fulfilling the military’s additional needs after the launch of Operation Zarb-e-Azab. It has also demanded another 4% of the divisible pool for the development of Fata, Gilgit-Baltistan and Azad Kashmir. The Centre has sought approval of the provinces in this regard.

However, early this week Sindh Chief Minister Murad Ali Shah said that the proposal of allocating 3% of the federal divisible pool for security arrangements for CPEC-related projects was unconstitutional. He was of the view that this would set a wrong precedent; therefore, all the provinces should oppose the proposal collectively. The Chief Minister Secretariat also said that Punjab Finance Minister Dr Ayesha Ghaus Pasha has also supported Shah’s position on 3% funds.



“The matter did come under discussion during my meeting with the Sindh chief minister but Punjab would give its formal opinion at the NFC platform,” said Dr Pasha while talking to The Express Tribune. According to the finance ministry, before the launch of Operation Zarb-e-Azb, additional security-related spending was Rs191.9 billion that increased to Rs200 billion by the end of fiscal year 2014-15. This amount further increased to Rs249.4 billion by end of last fiscal year. For the current financial year, the government has allocated Rs283 billion for this purpose, it added.

After the launch of Operation Zarb-e-Azab, the government has shown a new entry as ‘other outstanding liabilities’ under the head of additional security spending. It has set aside Rs25 billion for 2014-15, Rs24.9 billion for 2015-16 and Rs30 billion for 2016-17.

The contingent liabilities that stood at Rs141.8 billion before launch of the operation against militants increased to Rs190 billion this year. The miscellaneous expenses that amounted to Rs50 billion before Operation Zarb-e-Azb have been shown at Rs63 billion for the current fiscal year.

Published in The Express Tribune, January 14^th, 2017.