Pakistan hikes defence outlay by Rs110 billion

Pakistani has hiked its defence outlay by Rs 110 billion over the budgeted allocation of Rs442 billion for major military operations against the Taliban in the volatile tribal areas bordering Afghanistan.

The changes, listed in a "country paper" presented by the government to the International Monetary Fund, include a reduction in the allocation for development by Rs73 billion.

The allocations for military have been made while outlays on the development and non-development budgets have been slashed by 50% and 20% respectively to create fiscal space for rehabilitating the flood-affected population.

The changes were made even before the first quarter of the current fiscal year has ended.

The projected defence expenditure has been increased to Rs552 billion from the Rs442.2 billion in the 2010-11 budget approved by parliament.

The Dawn newspaper quoted its sources as saying that the increase was made for a major military operation in the tribal areas bordering Afghanistan.

Chief military spokesman Maj Gen Athar Abbas said: "The increase in defence budget is not in my knowledge and matters related to military operations cannot be disclosed."

The increase in defence expenditure was made at a time when the government is reducing its current expenditures from Rs1,997 billion as approved in the budget to Rs1,866 billion and the development budget has been cut from Rs663 billion to Rs590 billion.

The paper submitted to the IMF highlights the government's plan to reduce overall expenditure by Rs68.4 billion to Rs2,696 billion and increase revenue by Rs197 billion to Rs2,607 billion.

Media reports said the paper submitted to the IMF has not been formally approved by the cabinet or parliament.

Finance secretary Salman Siddique said it was an initial paper informing the organisation about the government's plans to reduce deficit and maintain fiscal discipline.

All stakeholders, including chief ministers of the four provinces, were informed before it was presented to the IMF.

"We will also get approval soon from the cabinet and parliament," Siddiqui said.

Officials said the measures were being taken because Pakistan had to remain in the IMF programme and reduce budget deficit to 4% of the gross domestic product.