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Pakistan drugged out on defense and debt
By Syed Fazl-e-Haider
KARACHI - Pakistan is spending more on debt servicing than on defense, and seven times more on arms than on primary schools, according to a United Nations report that calls on governments and aid donors to seek ways of converting unproductive spending to more productive investment.
Higher defense and debt costs helped to widen the fiscal deficit to 490.4 billion rupees (US$5.7 billion), or 2.9% of gross domestic product (GDP) in the six months to December.
Debt servicing in the period, the first half of the fiscal year, rose to 310.4 billion rupees while 215 billion rupees was spent on defense purposes, says the report of the United Nations Educational, Scientific and Cultural Organization (UNESCO).
Pakistan spends 1.5% of GDP on education, and only 0.5% of GDP on health. Defense spending and debt servicing consume more than 60% of the national budget each year.
Rising defense spending and debt servicing make it increasingly difficult for the government to meet its revised budget deficit target of 4.7% of GDP, or 807 billion rupees for the current fiscal year, which will end on June 30.
"The gap between national revenues and expenditures widened to 490 billion rupees in the first half of the current financial year that virtually made the year-end budget deficit target of 4.7% of GDP unrealistic," according to a report in The Express Tribune. In the first six months, total income of federal and provincial governments remained at 989.6 billion rupees against expenditure of 1.48 trillion rupees.
The federal government borrowed 119.6 billion rupees from external sources. Out of this, 72.6 billion rupees was used for retiring or servicing external debt, while the balance of 47 billion rupees was utilized to finance the deficit.
Critics say that 63 years after gaining independence, Pakistan is yet to move from a "national security state" to a welfare state in which over 60% of the national budget would be spent on human and social development.
One can see the precedence of "security" over "public welfare" from the budgetary allocations made by Pakistan for education, heath and defense in the current fiscal year, when the government allocated 21.4 billion rupees for education and 16.9 billion rupees for the health sector, while 442 billion rupees were allocated for defense spending.
Under a series of mini-budgets, spending on education, healthcare and infrastructure has been lashed, while defense spending has been increased. For example, the government in October projected that it would increase its defense budget by 25%, or 110 billion rupees, to 552 billion rupees for the current fiscal year.
Pakistan has one of the world's largest out-of-school populations, at about 7.3 million.
The UNESCO report said diversion of national resources to the military and loss of government revenue meant that armed conflict shifted the responsibility for education financing from government to households.
Meanwhile, Pakistan's ruling elite maintain their perks and privileges at all costs. Prime Minister Yousaf Raza Gilani recently gave the go-ahead for luxury parliamentary lodges to be built at a cost of 3 billion rupees.
The country's debt servicing obligations have been squeezing the resources meant for development projects, particularly in the social sector, while more than 75% of the 170 million population, particularly those in rural areas, live in highest level of deprivation level and lowest level of economic development.
The Public Sector Development Programme budget for the present fiscal year has been cut by 46% to 150 billion rupees in order to limit the fiscal deficit.
Even in times of crises, such as during last year's devastating flooding, defense priorities have not been changed. According to the United Nations, the floods brought an economic and humanitarian disaster bigger than the December 2004 Asian tsunami and last year's Haiti earthquake, and affected about 20 million people.
This year's budget envisaged a 17% increase in defense spending, while next year's is expected to increase it further, leaving little scope for improved public welfare.
The consequences assets will be a large, unhealthy, non-skilled, illiterate and poor population and undeveloped and underdeveloped natural resources.
The country's economy is forecast to grow 2.3% in the fiscal year to June 30. If that falls short, to under 2%, per capita income, an important benchmark to determine the health of an economy, will shrink given annual population growth of 2%. More people will fall below the poverty line and struggle to survive on less than a dollar a day.
Pakistan's total external debt jumped 49% in the four years to June 2010, to $55.62 billion from $37.24 billion in June 2006. Even after paying $6.03 billion during the past three years, the foreign debt burden is still $53.7 billion.
In the fiscal year to last June, the government spent $3.1 billion on debt servicing - $2.34 billion as payment in principal and $775.5 million as interest. There is no plan for retiring the country's debt burden - though the government does have a solid plan for securing more loans from international lenders.
A welfare state safeguards the welfare of people by looking after their needs for education, healthcare and infrastructure, as it prioritizes social development in its annual budget allocations.
It is next to impossible to imaging Pakistan becoming a welfare state where the rich still easily avoid paying taxes; where at least 500 billion rupees are spent on defense, and hundreds of millions of rupees are set aside as interest on foreign loans.
Pakistan drugged out on defense and debt
By Syed Fazl-e-Haider
KARACHI - Pakistan is spending more on debt servicing than on defense, and seven times more on arms than on primary schools, according to a United Nations report that calls on governments and aid donors to seek ways of converting unproductive spending to more productive investment.
Higher defense and debt costs helped to widen the fiscal deficit to 490.4 billion rupees (US$5.7 billion), or 2.9% of gross domestic product (GDP) in the six months to December.
Debt servicing in the period, the first half of the fiscal year, rose to 310.4 billion rupees while 215 billion rupees was spent on defense purposes, says the report of the United Nations Educational, Scientific and Cultural Organization (UNESCO).
Pakistan spends 1.5% of GDP on education, and only 0.5% of GDP on health. Defense spending and debt servicing consume more than 60% of the national budget each year.
Rising defense spending and debt servicing make it increasingly difficult for the government to meet its revised budget deficit target of 4.7% of GDP, or 807 billion rupees for the current fiscal year, which will end on June 30.
"The gap between national revenues and expenditures widened to 490 billion rupees in the first half of the current financial year that virtually made the year-end budget deficit target of 4.7% of GDP unrealistic," according to a report in The Express Tribune. In the first six months, total income of federal and provincial governments remained at 989.6 billion rupees against expenditure of 1.48 trillion rupees.
The federal government borrowed 119.6 billion rupees from external sources. Out of this, 72.6 billion rupees was used for retiring or servicing external debt, while the balance of 47 billion rupees was utilized to finance the deficit.
Critics say that 63 years after gaining independence, Pakistan is yet to move from a "national security state" to a welfare state in which over 60% of the national budget would be spent on human and social development.
One can see the precedence of "security" over "public welfare" from the budgetary allocations made by Pakistan for education, heath and defense in the current fiscal year, when the government allocated 21.4 billion rupees for education and 16.9 billion rupees for the health sector, while 442 billion rupees were allocated for defense spending.
Under a series of mini-budgets, spending on education, healthcare and infrastructure has been lashed, while defense spending has been increased. For example, the government in October projected that it would increase its defense budget by 25%, or 110 billion rupees, to 552 billion rupees for the current fiscal year.
Pakistan has one of the world's largest out-of-school populations, at about 7.3 million.
The UNESCO report said diversion of national resources to the military and loss of government revenue meant that armed conflict shifted the responsibility for education financing from government to households.
Meanwhile, Pakistan's ruling elite maintain their perks and privileges at all costs. Prime Minister Yousaf Raza Gilani recently gave the go-ahead for luxury parliamentary lodges to be built at a cost of 3 billion rupees.
The country's debt servicing obligations have been squeezing the resources meant for development projects, particularly in the social sector, while more than 75% of the 170 million population, particularly those in rural areas, live in highest level of deprivation level and lowest level of economic development.
The Public Sector Development Programme budget for the present fiscal year has been cut by 46% to 150 billion rupees in order to limit the fiscal deficit.
Even in times of crises, such as during last year's devastating flooding, defense priorities have not been changed. According to the United Nations, the floods brought an economic and humanitarian disaster bigger than the December 2004 Asian tsunami and last year's Haiti earthquake, and affected about 20 million people.
This year's budget envisaged a 17% increase in defense spending, while next year's is expected to increase it further, leaving little scope for improved public welfare.
The consequences assets will be a large, unhealthy, non-skilled, illiterate and poor population and undeveloped and underdeveloped natural resources.
The country's economy is forecast to grow 2.3% in the fiscal year to June 30. If that falls short, to under 2%, per capita income, an important benchmark to determine the health of an economy, will shrink given annual population growth of 2%. More people will fall below the poverty line and struggle to survive on less than a dollar a day.
Pakistan's total external debt jumped 49% in the four years to June 2010, to $55.62 billion from $37.24 billion in June 2006. Even after paying $6.03 billion during the past three years, the foreign debt burden is still $53.7 billion.
In the fiscal year to last June, the government spent $3.1 billion on debt servicing - $2.34 billion as payment in principal and $775.5 million as interest. There is no plan for retiring the country's debt burden - though the government does have a solid plan for securing more loans from international lenders.
A welfare state safeguards the welfare of people by looking after their needs for education, healthcare and infrastructure, as it prioritizes social development in its annual budget allocations.
It is next to impossible to imaging Pakistan becoming a welfare state where the rich still easily avoid paying taxes; where at least 500 billion rupees are spent on defense, and hundreds of millions of rupees are set aside as interest on foreign loans.
