Funding the war
As in the past, the amount committed under the CSF would be reimbursed after the expenditure has been made
The writer served as Executive Editor of The Express Tribune from 2009 to 2014
If the world oil prices remain hovering between $45-50 a barrel over the next four months, Pakistan is likely to save around $3 billion on the oil import bill by the end of June 2015. In addition to this windfall saving, an amount of $1 billion has been promised by Washington under the Coalition Support Fund (CSF) arrangement, which has been extended on Pakistan’s request by one year ending in US fiscal year of 2015. Along with this, Washington has also promised to disburse an amount of $532 million by way of economic assistance during the year, under what is called a national waiver.
A saving of almost $3 billion or around Rs300 billion in the oil import bill during the current fiscal year is likely to more than meet the estimated combined expenditure of Rs100 billion on the National Action Plan (NAP) and rehabilitation of internally displaced persons (IDP). The upfront expenditure of Rs100 billion ($1 billion) on the war on terror to be reimbursed under the CSF plus there has been an estimated decline in revenue collection by an amount of Rs119 billion this year, because of the shortfall in the revenue income from customs and sales tax. Ironically so, in the wake of the steep fall in the oil import prices by almost half, from $110 a barrel to $45. This perhaps, explains in part why it was not found necessary to revise upward the fiscal deficit target of 4.9 per cent of GDP for the current year during the last week’s sixth review of Pakistan’s IMF programme.
As in the past, the amount committed under the CSF would be reimbursed after the expenditure has been made and reconciled by US officials mandated to audit and scrutinise the bills and vouchers against a verifiable progress report on the war on terror. Even the $532 million of economic assistance is expected to be disbursed only after we have satisfied the US auditors that the war on terror is progressing on the right lines. This amount is not from the assistance earmarked under the Kerry-Lugar-Berman Act, passed in 2009, which had required certification for disbursement. When unable to issue such a certification, the administration uses a national interest waiver to provide assistance. Such a waiver implies that it is in the US national interest to provide financial assistance to a country, which may not meet all the requirements for receiving US assistance.
Under the new CSF arrangement, of the total amount of reimbursements, $300 million will be reimbursed only after the US secretary of defence certifies that Pakistan has “undertaken military operations in North Waziristan that have contributed to significantly disrupting the safe haven and freedom of movement of the Haqqani network in Pakistan”. And not later than 90 days after the date of the enactment of this Act and every six months thereafter, the secretary of defence shall, in consultation with the secretary of state, submit to the appropriate committees of Congress, a report on the nature and extent of the bilateral security cooperation between the US and Pakistan.
The report shall include, at a minimum, the following:
1) A description of any strategic security objectives that the US and Pakistan have agreed to pursue in cooperation.
2) A description of programmes or activities that the US and Pakistan have jointly undertaken to pursue mutually agreed security cooperation objectives.
3) A description and assessment of the effectiveness of efforts by Pakistan, unilaterally or jointly with the US, to disrupt operations and eliminate safe havens of al Qaeda, the Tehreek-e-Taliban Pakistan, and other militant extremist groups such as the Haqqani network and the Quetta Shura Taliban located in Pakistan.
4) A description and assessment of efforts by Pakistan, unilaterally or jointly with the US, to counter the threat of improvised explosive devices and the networks involved in the acquisition, production and delivery of such devices and their precursors and components.
5) An assessment of the effectiveness of any US security assistance to Pakistan to achieve the strategic security objectives described above.
6) A description of any metrics used to assess the effectiveness of programmers and activities described above.
The report shall be submitted in unclassified form, but may include a classified annex. The requirements in this section shall terminate on December 31, 2017.
Published in The Express Tribune, February 11th, 2015.
A saving of almost $3 billion or around Rs300 billion in the oil import bill during the current fiscal year is likely to more than meet the estimated combined expenditure of Rs100 billion on the National Action Plan (NAP) and rehabilitation of internally displaced persons (IDP). The upfront expenditure of Rs100 billion ($1 billion) on the war on terror to be reimbursed under the CSF plus there has been an estimated decline in revenue collection by an amount of Rs119 billion this year, because of the shortfall in the revenue income from customs and sales tax. Ironically so, in the wake of the steep fall in the oil import prices by almost half, from $110 a barrel to $45. This perhaps, explains in part why it was not found necessary to revise upward the fiscal deficit target of 4.9 per cent of GDP for the current year during the last week’s sixth review of Pakistan’s IMF programme.
As in the past, the amount committed under the CSF would be reimbursed after the expenditure has been made and reconciled by US officials mandated to audit and scrutinise the bills and vouchers against a verifiable progress report on the war on terror. Even the $532 million of economic assistance is expected to be disbursed only after we have satisfied the US auditors that the war on terror is progressing on the right lines. This amount is not from the assistance earmarked under the Kerry-Lugar-Berman Act, passed in 2009, which had required certification for disbursement. When unable to issue such a certification, the administration uses a national interest waiver to provide assistance. Such a waiver implies that it is in the US national interest to provide financial assistance to a country, which may not meet all the requirements for receiving US assistance.
Under the new CSF arrangement, of the total amount of reimbursements, $300 million will be reimbursed only after the US secretary of defence certifies that Pakistan has “undertaken military operations in North Waziristan that have contributed to significantly disrupting the safe haven and freedom of movement of the Haqqani network in Pakistan”. And not later than 90 days after the date of the enactment of this Act and every six months thereafter, the secretary of defence shall, in consultation with the secretary of state, submit to the appropriate committees of Congress, a report on the nature and extent of the bilateral security cooperation between the US and Pakistan.
The report shall include, at a minimum, the following:
1) A description of any strategic security objectives that the US and Pakistan have agreed to pursue in cooperation.
2) A description of programmes or activities that the US and Pakistan have jointly undertaken to pursue mutually agreed security cooperation objectives.
3) A description and assessment of the effectiveness of efforts by Pakistan, unilaterally or jointly with the US, to disrupt operations and eliminate safe havens of al Qaeda, the Tehreek-e-Taliban Pakistan, and other militant extremist groups such as the Haqqani network and the Quetta Shura Taliban located in Pakistan.
4) A description and assessment of efforts by Pakistan, unilaterally or jointly with the US, to counter the threat of improvised explosive devices and the networks involved in the acquisition, production and delivery of such devices and their precursors and components.
5) An assessment of the effectiveness of any US security assistance to Pakistan to achieve the strategic security objectives described above.
6) A description of any metrics used to assess the effectiveness of programmers and activities described above.
The report shall be submitted in unclassified form, but may include a classified annex. The requirements in this section shall terminate on December 31, 2017.
Published in The Express Tribune, February 11th, 2015.