Pakistan: Facing bankruptcy, FM Aurangzeb ups defense budget by 15%
Virendra Pandit
New Delhi: Pakistan Finance Minister Muhammad Aurangzeb on Wednesday announced a nearly 15 percent hike in the cash-strapped nation’s defense spending and allocated Rs 2,122 billion in the 2024-25 budget, marking a significant increase from last year amid efforts to secure a fresh loan from the IMF to meet the hand-to-mouth country’s external liabilities.
Last year, the government allocated Rs 1,804 billion for defense, which was higher than the Rs 1,523 billion in 2022.
Tabling the first budget of the Pakistan Muslim League (Nawaz) (PML-N) and Pakistan Peoples Party (PPP) coalition government, which came to power after the February 8 general elections, Aurangzeb said the government set a 3.6 percent GDP growth target for the next year — higher than the 3.5 percent set for the outgoing year. The country, however, missed that target and could only achieve 2.38 percent growth.
Claiming that “the economic crisis has ended,” he said the total volume of the budget would be Rs 18,877 billion and announced a Rs 2,122 billion allocation for defense spending, reflecting a 14.98 percent increase, the media reported.
The defense sector expenses are the second-biggest component of the annual expenditure after the debt payments, which for the next year would be Rs 9,700 billion and constitute the single-biggest expense of the debt-trapped country, which is dependent for its very survival on loans from ‘friendly’ nations like China, Saudi Arabia, and others.
Aurangzeb, a former JP Morgan banker, said the inflation target for the next fiscal year would be 12 percent while the budget deficit would be 6.9 percent of the GDP.
He said the tax collection target would be Rs 12,970 billion — 38 percent higher than the previous year. The non-tax revenue target of the government would be Rs 3,587 billion against Rs 2,963 billion set for the previous year.
The government also decided to provide a historic Rs 1,500 billion Public Sector Development Programme (PSDP) at the federal level and by adding the provincial component of the development budget, the net PSDP comes to a whopping Rs 3,797 billion.
The minister claimed the economic crisis had ended and the government fast-tracked the development process by offering new opportunities. He also announced plans to speed up the privatization of loss-making state-owned entities as well as outsource various airports.
