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Defence budget likely to go up by Rs 130 bn
Monday, February 22, 2010
By Mehtab Haider
ISLAMABAD: Pakistans defence budget is all set to increase by, at least, Rs 130 billion in the wake of the ongoing military operation against the militants in the tribal areas as well as on account of increased salaries of military personnel, paving the way for achieving a broader consensus with the IMF for jacking up the fiscal deficit target up to 5.1 per cent of the GDP from the earlier envisaged target of 4.9 per cent.
By end-June 2010, the defence expenditure may go up to Rs 205 billion on account of the military operation as well as increased salaries of armed forces personnel. For the time being, it is projected during the talks with the IMF that the defence expenditure will be increased in the range of Rs 130 billion.
The power sector subsidies, the sources said, was still the unresolved issue between the donors and the government. However, the finance wizards conveyed to the IMF, the World Bank and the Asian Development that they would not pass on the benefits of decreased prices of furnace oil in monthly fuel adjustment in order to recover arrears and maintaining this year subsidy within the desired limit of Rs 55 billion.
A senior official of the Gilani government, who was a part of the recently-concluded talks between Pakistan and the IMF at Dubai, confided to The News on Sunday that the fiscal target was allowed to grow due to increased expenditures on security as well as rising subsidy amounts during the current fiscal year.
The government, he said, had allocated Rs 342.9 billion in the shape of defence allocation. The salaries of armed forces personnel, who are taking part in the military operation, were increased from July 1, 2009 while others salaries were jacked up from January 2010. The salary component of the military will increase the allocation by Rs 70 to 80 billion while non-salary component will up the allocation by Rs 100 billion in the wake of the ongoing military operation against the militants, said the official.
The IMF, the sources said, allowed jacking up the fiscal deficit target on the basis of the assumption that Islamabad would be able to get the desired external inflows of $1.4 billion from the Friends of Democratic Pakistan (FODP) besides getting releases from the USA during the remaining four months of the current fiscal year.
It was smooth sailing for Pakistan as they agreed to all our projections without raising any major question, said one of the officials, who was a part of the delegation during the review talks with the IMF.
The expenditure side was readjusted massively as the government conceded to scaling down the allocation of the Public Sector Development Programme (PSDP) by around Rs 150 billion while defence and subsidies allocation would be revised upward in order to maintain the overall fiscal deficit target of 5.1 per cent of the GDP.
Before going to hold the review talks with the IMF in Dubai, the sources said that Pakistan worked out the fiscal deficit target in the range of 5.6 per cent of the GDP. But on the basis of external inflows from the FoDP and the USA, the IMF agreed to increase the fiscal deficit target to 5.1 per cent of the GDP.
Now the IMF staff will prepare a report on the basis of discussions held with the Pakistani authorities, which will be tabled before its executive board in its meeting expected to be held in Washington DC on March 24, 2010 in which the next tranche of $1.2 billion for Pakistan was likely to be approved.
Talking to The News on Sunday, Federal Minister for Finance Shaukat Tarin said the increased expenditures on security and subsidies paved the way for jacking up the fiscal deficit target to 5.1 per cent of the GDP for 2009-10. He also said that Pakistan would achieve the GDP growth target of 3.3 per cent in the wake of rebound of manufacturing sector as well as improved performance of agriculture output, especially the wheat crop. However, he said the inflation target would be missed out and revised upward to 12 per cent against the initial target of 9.5 per cent for 2009-10.
Defence budget likely to go up by Rs 130 bn
Monday, February 22, 2010
By Mehtab Haider
ISLAMABAD: Pakistans defence budget is all set to increase by, at least, Rs 130 billion in the wake of the ongoing military operation against the militants in the tribal areas as well as on account of increased salaries of military personnel, paving the way for achieving a broader consensus with the IMF for jacking up the fiscal deficit target up to 5.1 per cent of the GDP from the earlier envisaged target of 4.9 per cent.
By end-June 2010, the defence expenditure may go up to Rs 205 billion on account of the military operation as well as increased salaries of armed forces personnel. For the time being, it is projected during the talks with the IMF that the defence expenditure will be increased in the range of Rs 130 billion.
The power sector subsidies, the sources said, was still the unresolved issue between the donors and the government. However, the finance wizards conveyed to the IMF, the World Bank and the Asian Development that they would not pass on the benefits of decreased prices of furnace oil in monthly fuel adjustment in order to recover arrears and maintaining this year subsidy within the desired limit of Rs 55 billion.
A senior official of the Gilani government, who was a part of the recently-concluded talks between Pakistan and the IMF at Dubai, confided to The News on Sunday that the fiscal target was allowed to grow due to increased expenditures on security as well as rising subsidy amounts during the current fiscal year.
The government, he said, had allocated Rs 342.9 billion in the shape of defence allocation. The salaries of armed forces personnel, who are taking part in the military operation, were increased from July 1, 2009 while others salaries were jacked up from January 2010. The salary component of the military will increase the allocation by Rs 70 to 80 billion while non-salary component will up the allocation by Rs 100 billion in the wake of the ongoing military operation against the militants, said the official.
The IMF, the sources said, allowed jacking up the fiscal deficit target on the basis of the assumption that Islamabad would be able to get the desired external inflows of $1.4 billion from the Friends of Democratic Pakistan (FODP) besides getting releases from the USA during the remaining four months of the current fiscal year.
It was smooth sailing for Pakistan as they agreed to all our projections without raising any major question, said one of the officials, who was a part of the delegation during the review talks with the IMF.
The expenditure side was readjusted massively as the government conceded to scaling down the allocation of the Public Sector Development Programme (PSDP) by around Rs 150 billion while defence and subsidies allocation would be revised upward in order to maintain the overall fiscal deficit target of 5.1 per cent of the GDP.
Before going to hold the review talks with the IMF in Dubai, the sources said that Pakistan worked out the fiscal deficit target in the range of 5.6 per cent of the GDP. But on the basis of external inflows from the FoDP and the USA, the IMF agreed to increase the fiscal deficit target to 5.1 per cent of the GDP.
Now the IMF staff will prepare a report on the basis of discussions held with the Pakistani authorities, which will be tabled before its executive board in its meeting expected to be held in Washington DC on March 24, 2010 in which the next tranche of $1.2 billion for Pakistan was likely to be approved.
Talking to The News on Sunday, Federal Minister for Finance Shaukat Tarin said the increased expenditures on security and subsidies paved the way for jacking up the fiscal deficit target to 5.1 per cent of the GDP for 2009-10. He also said that Pakistan would achieve the GDP growth target of 3.3 per cent in the wake of rebound of manufacturing sector as well as improved performance of agriculture output, especially the wheat crop. However, he said the inflation target would be missed out and revised upward to 12 per cent against the initial target of 9.5 per cent for 2009-10.
Defence budget likely to go up by Rs 130 bn
