Pakistan not to make CSF part of budget estimates

US owes $9 billion to Pakistan spent on war against terrorism, says finance adviser Miftah Ismail


Shahbaz Rana April 11, 2018
PHOTO: APP

ISLAMABAD: After 16 years, Pakistan has decided to exclude the Coalition Support Fund (CSF) receipts from the United States from its new fiscal year budget estimates, indicating that the relations between the two countries are unlikely to revive to the pre-Donald Trump era in the near future.

The decision to exclude the CSF estimates from the budget 2018-19 has been taken during the pre-budget meetings being held in the finance ministry, according to sources.

The CSF payments are reimbursements of the cost that Pakistan has incurred while fighting the US-led global war against terrorism.

Since 2001 when Pakistan became a frontline state in the war against terror, the country received CSF at an average of $971.5 million per annum. However, this will be the first time since then that the government will not make the CSF receipts part of the budget, as the US did not disburse any sum in the past one year.

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The CSF disbursements will not be part of the non-tax revenue estimates being prepared for the financial year 2018-19, said Dr Miftah Ismail, Adviser to Prime Minister on Finance, while talking to The Express Tribune.

“Pakistan has sufficient resources to meet its defence needs and can also take care of people affected by war against terrorism”, said Ismail.

He further said that the next year’s budget will be presented on the realistic revenue and expenditure estimates and “the doubtful receipts like the CSF will not be part of the budget”.
The de facto finance minister said the US still owed $9 billion to Pakistan that “we spent while fighting the war against terrorism”.

US disburses $550 million under CSF to Pakistan

Ismail’s statement indicates departure from the past when the budgets were presented by understating the expenditures and overstating the revenues.

For the outgoing fiscal year, Pakistan had budgeted Rs141.8 billion (or $1.33 billion) from the US on account of the CSF disbursements. But so far Washington has not released any amount.

After a change of administration in Washington, many issues between Pakistan and the US remained unresolved including future assistance to Pakistan, according to people privy to the developments.

At the beginning of the year, President Donald Trump harshly criticised Pakistan on twitter, accusing it of taking billions from the US and giving “nothing but lies and deceit.”

However, the CSF disbursements are not the aid, as this is the cost that the US had agreed to pay for using Pakistan’s soil, its airspace and the cost of refurbishment of the military hardware used in the war.

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The defence analysts and the government are unanimous in their view that the US was making Pakistan a scapegoat to cover up its own failures in Afghanistan.

Historically, the CSF disbursements remained crucial for building foreign currency reserves, lessening strains on the external accounts and narrowing down the budget deficit. The Washington’s decision to withhold the CSF receipts has put extra strain on Pakistan’s external account that is already under pressure due to a growing trade deficit.

By the end of March, Pakistan’s official foreign reserves slipped to $11.7 billion, barely sufficient to cover next two months import bill.

The government will have to find an alternate source to fill the gap that will create due to exclusion of the CSF estimates.

Since 2001, the US has sanctioned $33.4 billion for reimbursements to Pakistan and 44 per cent of it (or $14.573 billion) were under the CSF. By excluding the $14.5 billion cost of logistics and aerial support, the approved civilian and security-related aid to Pakistan from 2002 to 2016 was only $18.8 billion, according to the statistics compiled by US authorities.

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Since it could not coerce Pakistan despite cutting the CSF disbursements, the US has started creating problems for Islamabad at forums where it enjoys significant clout. It has successfully manoeuvred in the Financial Action Task Force (FATF) to place Pakistan on grey list with effect from June.

The executive director of the Asia Pacific Group (APG) on Money Laundering met Dr Miftah Ismail on Monday and discussed the issues related to the action plan that Pakistan will have to implement to come out of the grey list. The APG is part of the global coalition against the money laundering that includes FATF.

Pakistan is ready to implement “a feasible and possibly implementable” action plan, said Dr Ismail. He said Pakistan would not accept unworkable conditions, as the country’s Anti-Money Laundering and Counter Terrorism Financing regime was already in line with the global standards.

The action plan will be presented in the FATF Plenary in June for its approval, which will set a path for the country to follow to exit from the grey list.

 

COMMENTS (3)

Anuj Yadav | 5 years ago | Reply @Imran Sheikh: Please go to international court You have already lost most of the cases there
Zahid qadeer | 5 years ago | Reply And what about outstanding dues of PTCL privatization, owe by Atesilat for so many years.???
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