KARACHI, 2 June 2005 — Pakistan plans to increase defense spending in the new budget being unveiled next week but will also divert funds to stem growing poverty, which afflicts a third of its population, officials said.
Officials would not give a figure for the hike in military spending set to be announced in Prime Minister Shaukat Aziz’s 2005-2006 budget on June 6.
However Pakistan’s defense expenditure often comes under severe criticism as it consumes a large chunk of resources in a country where more than 30 percent of its 150 million people live below the poverty line.
“A considerable increase in defense budget is imminent,” a senior said without specifying the amount. “For the past few years the defense budget has not been increased in real terms.”
The total outlay in the budget would be more than 1,000 billion rupees ($16.7 billion), compared with 801 billion rupees in the current fiscal year, officials said.
Defense spending this year stood at 194 billion rupees against 181 billion rupees in 2003-2004, as the military remained locked in operations against Al-Qaeda suspects in the rugged tribal region on the Afghan border. Since independence in 1947, Pakistan has spent huge amounts on defense to keep up with rival India, against whom it has fought three wars.
The nuclear-armed neighbors last year launched a peace dialogue to improve relations, after they came close to a fourth war in 2002 over the Himalayan state of Kashmir, which both claim is theirs.
Pakistan’s minister of state for finance, Omar Ayub Khan, who is expected to present the budget, refused to confirm the figures but added: “We will not compromise our defense capabilities and national interests.” At present, the country’s economic managers are on a high after Pakistan’s gross domestic product (GDP) grew at a rate of 8.3 percent against a target of 6.6 percent this year.
But in a pre-budget review, the central State Bank of Pakistan warned last week that rising inflation posed a serious challenge to the economy. Inflation passed 11 percent in 2004-2005 compared with 4.2 percent last year. Aziz said recently his government would increase efforts to tackle Pakistan’s weak social and physical infrastructure and promised to give the nation “a pro-growth budget”.
The government has approved 300 billion rupees this year for development — 48 percent higher than in 2004-2005 — aimed at creating 300,000 new jobs, increasing technical education and rural credit facility as well as the supply of clean drinking water, the premier said.
