SNEHESH ALEX PHILIP and NAYANIMA BASU
Experts say Pakistan's move may in effect entail no hike in the budget for the next fiscal but will not see any actual cut.
The Pakistani military, in an “unprecedented” decision, has announced that it will accept “stringent cuts” to its budget for the next financial year, in line with broader austerity measures being introduced by the Imran Khan government.
The move is being seen as the country coming under pressure due to the $6 billion loan it has taken from the International Monetary Fund (IMF).
Sources in Pakistan and the Indian defence establishment, however, say the austerity measure may in effect entail no hike in the budget for the next fiscal and is not any actual cut. The Pakistani defence budget for the current fiscal was pegged at $11.4 billion.
“One will have to wait and see the defence budget being presented for the fiscal 1 July 2019 to 30 June 2020 to actually know for sure what they mean by a cut. But as per initial information received, there would not be a hike,” a source in the Indian establishment monitoring the development in Pakistan told ThePrint.
“This is mere tokenism and a gesture to the IMF that it will follow its conditions,” said S.D. Muni of the New Delhi-based think tank, the Institute for Defence Studies and Analyses (IDSA). “The Pakistan military will never accept such a step and Imran Khan will not dare disturb the military’s budget. This is all a hogwash.”
Sources, however, added that if indeed there is a cut, the China angle will have to be monitored to see if Beijing will offset any such measure by offering long-term payment options to the Pakistan military, which is increasingly dependent on the neighbouring country for equipment and modernisation.
Khan lauds move, will not affect security, says military
Pakistan Prime Minister Imran Khan, who held a budget preparatory meeting Tuesday, tweeted late in the evening appreciating the military’s “unprecedented voluntary initiative”, adding that the money saved will be spent on development of tribal areas and Balochistan.
I appreciate Pak Mil's unprecedented voluntary initiative of stringent cuts in their defence expenditures for next FY bec of our critical financial situation, despite multiple security challenges. My govt will spend this money saved on dev of merged tribal areas & Balochistan.
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Following this, the military tweeted, emphasising that the cuts “will not be at the cost of defence and security”, and that it was important for the military to participate in the rebuilding of Balochistan and the erstwhile tribal areas.
Maj. Gen. Asif Ghafoor, the director general of ISPR, the military’s communications arm, added that the budget slashes would be managed “internally” by all three branches of the armed forces taking into account strategic compulsions.
Voluntary cut in def budget for a year will not be at the cost of def & security. We shall maint effective response potential to all threats.Three services will manage impact of the cut through appropriate internal measures. It was imp to participate in dev of tribal areas & Bln.
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A senior journalist based in Pakistan, who did not want to be identified, said the austerity measures were the result of the dire state of the country’s economy.
“One cannot even have biscuits in government offices,” the journalist said. “There is also criticism in the government and public that it is about time that the big boys (a reference to the Pakistani military) tightened their belts. The lifestyle of the generals will put Trump Towers to shame.”
Pakistan was the 20th biggest military spender in the world in 2018 at an expenditure of $11.4 billion, according to data released by the Stockholm International Peace Research Institute (Sipri) in April. The military spending in 2018 accounted for 4 per cent of Pakistan’s gross domestic product (GDP), which is the highest level since 2004, according to the report by the Sweden-based institute.
The IMF pressure
On 12 May, the IMF had announced that it has offered a loan of $6 billion to the Pakistani government. This is the 13th such loan being offered by the body to Islamabad to stabilise its dwindling economy. Pakistan already owes $5.8 billion to the IMF from past bailouts.
Pakistan has been forced to tighten its budget to tame its fiscal deficit following directions from the IMF.
The IMF has called on the country to trim its primary budget deficit by the equivalent of $5 billion, but previous civilian rulers have rarely dared to curtail defence spending for fear of stoking tensions with the military.
More than half of the state’s spending currently goes to the military and debt-servicing costs, limiting the government’s options for reducing expenditure.
According to the official sources in India, the Imran Khan government’s decision was expected as it was part of the conditionalities laid down by the IMF.
“This was expected and not unprecedented,” an official told ThePrint. “Anyway, the Pakistan government never had any budget. All of it was being managed by America by way of military aid. But now they have IMF loan to pay off, which they cannot overlook.”
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