Pakistan’s new Finance Minister Hafeez Sheikh will present the 2019-20 budget Tuesday, but all eyes are on the defence outlay after Prime Minister Imran Khan announced last week that the military had voluntarily agreed to a cut due to the country’s “critical financial situation”.
The move came after Pakistan reached an agreement with the International Monetary Fund (IMF) for a $6 billion bailout over three years. Structural reforms and appropriate expenditure are among the many conditions put forth by the IMF for the loan, which will lead to additional funds from the World Bank and the Asian Development Bank.
In view of this, experts say the military budget cut is only to create a “narrative”.
However, little is known about what this cut will entail anyway. Not much is expected to be revealed either when Sheikh presents the budget in front of the Pakistan parliament.
Following the announcement by Khan, Pakistan Army chief General Qamar Javed Bajwa has already clarified that the military budget won’t be cut but will remain frozen at the current levels.
Not the full picture
Defence and financial analysts in Pakistan say the financial figures to be presented Tuesday by the finance minister won’t reveal the complete picture of the defence budget as it won’t include many hidden allocations. It will also have some civilian allocations that should actually be put under military expenditure.
For instance, pension for retired soldiers (worth PKR 260 billion or $1.77 billion) and security enhancement and undeclared allocations for major weapon procurements and strategic programme (PKR 45 billion or $306.32 million) are already excluded from the defence outlay.
“The finance ministry does number fudging when it comes to the defence budget. They move military expenditures under different civilian expenses — for example some of it is put under the Public Sector Development Programme — and the impression is given that it is a civilian expense,” said Khurram Husain, who writes about Pakistan’s economy for the country’s leading English daily Dawn.
“Also, given that the allocated military budget is not even available for the civilian government to audit, we know very little about where the military spends its budget,” added Husain.
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‘Number fudging’
In 2016, the Auditor General of Pakistan, a constitutional body empowered to examine all government expenditures made from public money, told the Pakistani parliament that the funds given to military institutions — especially like the Inter-Service Intelligence (ISI), Pakistan Army’s intelligence wing — were exempt from audit.
“Pakistan’s Auditor General has expressed reservations in the past at the Public Accounts Committee meeting at the National Assembly about the lack of auditing of the military budget,” said Ayesha Siddiqa, author of Military Inc.: Inside Pakistan’s Military Economy.
Siddiqa also agreed that the military budget’s exact figures are not known because some spending is hidden under civilian heads.
“There is definitely number fudging, some of which can be identified by looking at the detailed appropriation accounts of the government,” she said.
On paper, currently over 20 per cent of Pakistan’s annual budget officially goes to the military, and in recent years the armed forces have been pushing for more. Just in the last budget cycle, there was a 20 per cent hike in its yearly allocation. Out of the country’s Rs 5,932 billion annual budget for 2018-19, the military was allocated Rs 1,100 billion.
In a country known to have been dominated by the Pakistan Army with direct and indirect rules, it is unlikely that the military will be allowing any civilian scrutiny of its budget, especially under the newly-elected government of Imran Khan, who is widely believed to have come into power with the help of powerful military generals.
“Greater civilian oversight of the military budget is necessary and important. The defence budget is the second-largest spending after debt-servicing and we should know where that money is going,” Husain said, adding that “no one will get to know the true picture, not even about these recent voluntary budget cuts”.
Also read: Pakistan military plans budget cuts, but India thinks they’ll just juggle numbers
Window-dressing for IMF
Experts added that the announcement of military budget is more of a public relations exercise as it comes at a time when the IMF has offered Pakistan a bailout package due to its dire economic situation, and therefore the cut is not as voluntary as it seems.
Pakistan has been in the care of the IMF for 22 years out of the last 30.
“The present cut announced is mainly to impress the IMF and the general public. It is part of the larger narrative that the military has sacrificed more than the politicians,” said Siddiqa.