Islamabad, It is often said that while most countries have an army, in Pakistan, it is the Army which has a country. And this is perhaps why such an idea persists – Pakistan’s cabinet approved a budget for 2018-19 that gave the military Rs 1.2 trillion Pakistani Rupees (PKR), which was 23 percent of the total budget. Combined with the debt and interest repayments, more than half of the total budget of Pakistan went straight out of control of the government elected by the people.
Pakistan’s total budget for 2018-19 was PKR 5.237 trillion. A whopping 30.7 percent, or PKR 1.607 trillion was just repayment of existing debt and interests, up 17.8 percent from last year. Debt servicing a defence alone accounted for 53.7 percent of the total budget of Pakistan, newspaper Express Tribune reported.
So, compared to a defence budget of PKR 1.2 trillion, how much did the government allot for development? Just PKR 800 billion. That’s just 15.2 percent of the budget. And, that’s a massive 20 percent lower than it was last year.
A senior official has characterised the 10 percent rise in military expenditure as a ‘normal rise’ and said no ‘extraordinary increases’ are expected in coming years.
The budget also featured a record level of deficit of PKR 2.029 trillion, all of which would be bridge by further borrowing. This means Pakistan will just for this year borrow 25 percent more than it will pay back. This is perhaps better understood from the context of the coming elections in Pakistan – an unprecedented third in a row.
Ratings agencies like S&P and Fitch, and global financial institutions like IMF have all expressed alarm over the fact that Pakistan is increasingly becoming financially unsustainable. Pakistani politicians have however been busy selling the China-Pakistan Economic Corridor (CPEC) as a magic wand solution, creating the illusion that it will start paying out within a year.
All this, without taking much of the cost of CPEC into account. Even the State Bank of Pakistan has said it does not have a clear picture of how much of CPEC’s cost is based on loans from China, how much is Chinese investment and how much the Pakistan government is footing.
Whoever wins the election later this year, or even if the military returns to power, the new government is now faced with handling a country that’s in even more of a financial shambles than ever before.