Pakistan has entered into a phase of economic emergency where fewer choices left with zero chance of failure. Artificial appreciation of Pak Rupee with injected external loans created a gap between imports and exports which resulted in huge Trade Account deficit that followed by history’s worst Current Account Deficit. Now when PTI came into power, the brain of the party failed to deliver as no homework was found to deal with the major economic issues. Prime Minister took an unpopular decision without wasting further time and replaced the finance minister with an advisor having experience and qualification suitable for the related task. Opposite to Imran Khan’s earlier claims before elections, the regime is entering into 22nd IMF program for three years validity that has certain hard to digest conditions which the government agreed upon on no choice basis. One of the conditions is to check primary deficit to 0.6% of GDP excluding debt servicing which is around 2.5 percent in present scenario. This means, almost 2% reduction of expenses or increase in revenue on the contrary. It is obvious that government will try to reduce expenses through austerity measures together with ways to increase revenue so that a minimum threshold of economic activity and governmental affairs may be achieved. In this regard Pakistan Army has decided voluntarily to cut the defence budget or it will be unchanged for the next fiscal year to participate in this austerity drive. While this gracious act of Pak Army is being applauded by masses some hardliners are busy in making opinion that this is something forced by IMF.
Further to the decision of budget cut and to deliver a strong message, in an Inter-Services Public Relations (ISPR) press release shared by Director General of ISPR Maj Gen Asif Ghafoor on Twitter, the COAS stated that: “Irrespective of the voluntary cut in defence budget for the coming financial year, there shall be no impact on our response potential to all types of threat and quality of life of the soldiers.” Gen Bajwa also assured his troops that the ‘no pay raise’ decision applied only for officers and not for soldiers. “We shall manage the shortfall by tightening our belt in areas where it doesn’t affect the two aforesaid aspects,” he said. As the government and Army agreed to slash the defence budget for the next fiscal year, the saved money will be used to aid the development of the merged tribal areas and Balochistan. This will increase the trust of the people of these areas who are being manipulated against army by anti-state elements. DG ISPR also criticised the Indian media for “spinning” the news of Pakistani defence budget cuts and made it clear in a post shared on Twitter by stating that “Don’t forget, we were the same forces with same budget on 27 Feb 19. We have the capability & capacity to respond. Remember, it’s not budgeting, its resolve of force & the nation firmly standing behind its forces,” he added.
The government and the army have agreed to slash the defence budget for the next fiscal year. The resources will be used to finance development projects in the tribal areas merged into Khyber Pakhtunkhwa and Balochistan
With this decision of Pak Army to stand by the sitting government for its austerity measures, this clearly has given message to anti-government drives that army and the government are on one page, committed collectively to address all issues faced by our country including but not limited to economic problems. This predicts the future of protests by opposition parties and lawyers movements who wish for toppling the current regime due to strict accountability moves. On the accountability front, Army courts have recently given decisions against its high ranked officers found guilty including a death penalty. Now with these positive moves by the most respected and powerful institution of Pakistan other government and non-government segments are feeling pressure to respond accordingly. Those who want to run away from the accountability or are on some agenda to inculcate negativity against the state are of the opinion that it is not a voluntary decision of army but implemented by IMF by force.
They support their claim by stating report published by Stockholm International Peace Research Institute according to which Pakistan in 2018 was the 20th biggest military spender in the world with an expenditure of USD 11.4 billion. The military spending of 2018 made up for four per cent of Pakistan’s gross domestic product (GDP) which is the highest level since 2004 and IMF took it very seriously. According to the report, India’s military spending was the lowest since the 1960s and made up for 2.4pc of its GDP. It is pertinent to mention here that after 9/11 the region has become focus of US lead war on terror which has increased potential threats for Pakistan both internally and externally. Both sides of the border become vulnerable to these potential threats due to our strategic depth. Internally, armed forced started off assault against terrorists and fencing Pak-Afghan border to secure our homeland which otherwise had become vulnerable to terrorist attacks. USA also cut aid for Pakistan Military spending against war on terror which also became part of expenses from GDP on no choice basis. Please note that IMF wants to reduce primary deficit to GDP ratio at 0.6% which requires a huge amount of Tax Revenue and discontinuation of subsidies instantly while country is witnessing an economic slowdown which otherwise could earn revenue from other sources. IMF has not directly imposed condition to reduce defence expenditures in this regard. Hence; this move of voluntarily measures in defence budget will act as a margin which otherwise may have been collected from taxation resulting burden on general public and business community.
The writer, a chartered banker in UK