Dawn, March 31, 2005
Defence spending may exceed allocation
By Khaleeq Kiani
ISLAMABAD, March 30: Pakistan's defence expenditure, which amounted to more than 52 per cent of the total annual allocation, has outpaced development expenditure which stood at about 40 per cent during the first half (July-December) of the current fiscal year.
At this pace, the defence spending is expected to go up to Rs205-210 billion at the end of the year against a budgetary allocation of Rs194 billion, sources in the finance ministry told Dawn.
Last year, the defence budget had increased by Rs20 billion to Rs180 billion against a budget allocation of Rs160 billion and the increase was regularized through post-facto parliamentary approval as part of the budget 2005-06, they said.
The sources said the defence expenditure during the first six months of the fiscal year amounted to Rs101.237 billion compared with development expenditure of Rs81.6 billion.
The federal government had allocated Rs193.9 billion and Rs202 billion for defence and public sector development programme (PSDP), respectively, under 2005-06 budget approved by parliament.
The defence spending has increased by about 16 per cent or Rs13.75 billion over Rs87.319 billion expenditure of the same period last year, although budgetary allocation was only seven per cent higher than last year's revised defence expenditure.
The sources said the real defence expenditure was quite higher than represented in the budgetary operations because a major part of receipts from the United States' activities along the Afghan border (Waziristan) remain off-budget. Pakistan receives on an average $70 million per month on this account.
The defence budget as a percentage of total federal budget has been increasing for the last three years, although development allocation for the current year was higher than defence for the first time in many years, the sources said.
They said the defence budget which constituted 18 per cent of the total budget in 2001-02, rose to 20 per cent in 2002-03 and 2003-04 and 21 per cent in the current year's allocations. The defence-related pensions were removed from the total allocation in 2002-03 budget and since then these were not reflected in the defence budget, the sources said.
The PSDP utilization in the first six months of the current fiscal year has amounted to about 40 per cent of the total annual allocation when compared with 35.5 per cent utilisation during the same period last year. The utilisation pace of PSDP was still much lower than desired.
"At the current pace of spending, the government would hardly be able to utilize Rs160-165 billion by end of the fiscal year against a PSDP allocation of Rs202 billion while defence spending would end up in the vicinity of Rs205 billion instead of Rs194 billion budgetary allocation," said a senior government official.
He said the slow PSDP utilization during earlier part of the year would force the authorities to make hasty releases in the last quarter thus compromising the quality of project implementation.
The public sector spending have remained slow despite the fact that principal accounting officers of ministries and divisions have been authorized to draw up to 45 per cent of development and 50 per cent of social sector allocation without prior approval to ensure maximum utilization, quality implementation and timely completion of projects.
Official figures duly verified by the Auditor General of Pakistan Revenue and the State Bank of Pakistan also suggest that total expenditure during the first six months stood at 8.3 per cent of GDP and outpaced revenue collection which was recorded at 6.87 per cent of GDP.
The total public sector expenditure during the six months stood at Rs513.768 billion while current expenditure amounted to Rs427.479 billion against a full year target of Rs903 billion and Rs701 billion, respectively.
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