Defence ministry wants bigger slice of budget pie

[Devil Soul]

Defence ministry wants bigger slice of budget pie
By Shahbaz Rana / Qamar Zaman
Published: April 21, 2016
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PHOTO: AFP

ISLAMABAD:
The Ministry of Defense has termed the indicative defence budget of Rs860 billion for next fiscal year insufficient, seeking its linkage with threat perception that it said was increasing due to current geo-political situation.

Against its current 60% share, the defence ministry also wants to take 100% of the Coalition Support Fund that the United States disburses in return for the country’s services against the war on terrorism. The remaining 40% goes to the federal government.

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The defence ministry also sought one billion dollars annually for next eight years to develop Federally Administered Tribal Areas (FATA).

The defence ministry made its case for increase in budgetary allocations and a claim over 100% CSF payment while giving a briefing on mid-year review of defence budget to Senate Standing Committee on Defence on April 13. The Chairman Standing Committee, Senator Mushahid Hussain Sayed, presented the report to the upper house of Parliament on Wednesday.

For the current fiscal year 2015-16, the government has originally approved Rs781 billion for the three armed forces. The Ministry of Finance has proposed Rs860 billion for new fiscal year 2016-17, beginning from July. The proposed budget is one-tenth or Rs79 billion higher than this year’s allocation.

However, the defence ministry has sought Rs920 billion – Rs139 billion or roughly 18% higher than this year’s budget. The Rs920 billion demand is only for meeting the needs of the armed forces. The allocations for defence procurements are over and above this amount. The finance ministry was not immediately in a position to respond to these demands. Early this month, Finance Minister Ishaq Dar had met the army chief to discuss the military’s budgetary requirements.

The report states that the defence ministry has demanded that the budgetary allocations of three armed forces should be linked with the threat perception. The defence ministry said that the threat perception has “markedly enhanced due to the current geo-political situation and Pakistan’s strategic location in the area,” according to the report.

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The defence ministry also made a claim over 100% of the CSF, according to the committee’s report. “The 40% deduction from the CSF reimbursements by government of Pakistan may be discontinued,” the ministry proposed to the parliamentary body.

Under a formula agreed under Pervez Musharraf’s regime, 40% of the CSF receipts go to the civilian government. So far, Pakistan has received $13 billion from the US. The ministry of defence informed the committee that it is the last year of the CSF arrangement and the US has yet to disburse $200 million.

The report also reveals that during the recent meeting of Pak-US Strategic Dialogue, Pakistan proposed establishing a border management fund worth $100 million. It claimed that the US government has agreed that a robust border management is essential for maintenance of peace on Pak-Afghan border and further negotiations on the matter would continue.

The defence ministry also proposed to the US authorities that $8 billion were required over a period of next five to eight years for the development of FATA, according to the report.

It has also demanded that sales tax and customs duties that the government of Pakistan charges on defence imports should be waived off. The National Logistic Cell and Frontier Works Organisation are already exempted from payments of income tax.

In yet another demand, the defence ministry said that the powers to waive off austerity measures of defence organisations should be given to the secretary defence by taking it from secretary finance.

The ministry has also sought preferential treatment in pensions and said that there should be one rank-one pension formula for the defence services. It has also proposed that a Pay and Pension Commission may be constituted for addressing the issues of increase in salaries.

Published in The Express Tribune, April 21st, 2016.

 

[shah1398]

The defence ministry also sought one billion dollars annually for next eight years to develop Federally Administered Tribal Areas (FATA).

This is much needed fund. Rather than losing funds in the trio of bureaucracy-Political agent and Co-Contractors, they shud be given to PA for same purpose. We have seen that PA has both will and skill to utilize these funds in FATA to best as they have done earlier and doing so right now.

Against its current 60% share, the defence ministry also wants to take 100% of the Coalition Support Fund that the United States disburses in return for the country’s services against the war on terrorism. The remaining 40% goes to the federal government.

Theoretically speaking the CSF is the reimbursement of the fund spent by PA and PAF from their own budget during operations. Why link provision of 100% of the fund as increase in defence budget?

 

[RAMPAGE]

Introduce direct tax reforms then.

 

[cloud4000]

Theoretically speaking the CSF is the reimbursement of the fund spent by PA and PAF from their own budget during operations. Why link provision of 100% of the fund as increase in defence budget?

I thought CSF is used to compensate Pakistan for both civilian and military expenses? For example, overflight rights.

 

[shah1398]

I thought CSF is used to compensate Pakistan for both civilian and military expenses? For example, overflight rights.

CSF does not cover all missions of ours but few of them. CSF is pays back part of what we have spent during WOT.

 

[Sully3]

i thought all of the CSF funds were used to acquire the 8 f16's this year.

 

[VCheng]

Introduce direct tax reforms then.

Or perhaps it would be easier to just hand over finance matters to the armed forces, in addition to the foreign and defense policies they already control.

 

[AZADPAKISTAN2009]

> Tough to say anything w.r.t budget


I think our Income would be higher if PIA & Pakistan Steele mills was working 100% capacity
and making 10 Billion dollar each as global companies

Some international partners had previously shown interest in investing 1-2 Billion dollar in Steele mills may be that suggestion should be considered. I think Russia not long ago proposed 1-2 Billion investment in this company to Modernize it

Meanwhile PIA's story is fighting corruption which a Retired Military Head can oversea and work with NAB directly to make the PIA corruption levels down so it makes Profits, reduce PPP's political impact on PIA company


International Standard for Profit Making from companies of these Magnitude

• Full Potential of company : 20 Billion USD /Year
• Corporate Taxes that would have been collected : 3 Billion dollars @ 30% of revenue
• Income Tax collected from Employees would have been 200-300 Million dollar on top

That is why there is shortfall in defense budget

So I think it is best interest of Government of Pakistan, and Military Establishment (Retired) to come together to make these two Organizations 100% functional

NATIONAL institutes are responsibility of Parliament

• If they make loss then politicians must take blame (Prison/ Anti Corruption Courts)
• National Assets should be 100% RESPONSIBILITY of political member in Parliament if they fail to return Profits they should be sent to prison

I think if Military / Government can come to consensus to tackle the PIA/Steeles Mills on emergency basis to fix it 100% only then the budget can be increase