It’s official – Pakistan Armed Forces has ultimately succumbed to the pressure of International Monetary Fund (IMF), the global lender which awarded bailout package of 6 billion dollars to the debt ridden country. The blueprint of IMF’s proposed condition will be visible in next budget of Imran Khan Government. The Islamic country follows July-June fiscal year model and the next public budget is expected to come very soon. The defense budget cut was among the major proposals of IMF to avail the package.
Imran Khan appreciated the military ‘voluntary’ cuts by Pakistan military. “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,” tweeted Khan yesterday.
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.
— Imran Khan (@ImranKhanPTI) June 4, 2019
IMF has demanded reform in tax structure, cut is burgeoning defense budget, increase in the tax base, lowering the taxation limit, ending tax concessions on businesses, and market-oriented exchange rate. As the debt ridden Islamic country has kneeled on the defense cut and free floating exchange rate, it is expected that other reforms would be implemented very soon.
Maj Gen Asif Ghafoor, spokesperson of Pakistan Armed Forces tried to put ‘brave face’ amid defense budget cuts and tweeted that this is not at the cost of defense and security. “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,” tweeted Ghafoor.
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.
— DG ISPR (@OfficialDGISPR) June 4, 2019
The defense cut is squarely opposite to what Pakistan government was advocating few months before the IMF budget. “The country’s defence budget is already low as compared to other states in the region, and therefore it should be increased,” said the then information minister, Fawad Chaudhry in February, a few months before the IMF deal. “We want to increase our defence and security; therefore, we need to increase our defence budget and for that purpose we want to generate more revenue,” he had added.
“The country’s defence budget is already low as compared to other states in the region, and therefore it should be increased,” says Fawad Chaudhry.https://t.co/Xg6TExz57J
— Dawn.com (@dawn_com) February 8, 2019
However, after the 6 billion dollar loan, the Pakistani government made it very clear that there will be cuts in civilian and military spending. “There will be austerity in the coming budget. We will try to keep government expenditures to the minimum possible level,” said Dr Hafeez Shaikh Prime Minister’s Adviser on Finance and Economic Affairs. “We are all on the same page whether these are civilians or armed forces that there should be serious, sustained and structured reforms through difficult decisions and all would participate in this effort and you would see this in the new budget,” he added.
Pakistan’s defense spending in 4 percent of GDP as compared to 2.4 percent of India but given the small size of the Pakistani economy, the total spending by Pakistan is 11.4 billion dollars vs the 66.5 billion dollars of India.
