Islamabad:
Pakistan could further increase the defense budget proposed for the next financial year to deal with Indian assault and spend more for indigenous research and development, in a decision that can also force provincial governments to share the additional cost.
Official sources have told the Express PK Press Club that due to the rapid security developments, the authorities concerned began to examine whether the previous increase of 18% of the defense budget for the financial year 2025-26 will be sufficient.
The question was discussed at the Ministry of Finance, the Ministry of Defense and the International Monetary Fund, the sources said.
While answering the question of whether Pakistan asked the IMF to allow an additional increase in the defense budget and to compensate it downwards, adjust the excess target of the agreed primary budget, the Minister of Finance Muhammad Aurangzeb replied that “we remain determined to remain both in terms of structural reform agenda and to meet all quantitative and structural benchmarks.
Before the 10th, the federal government had decided to give an 18% increase in the defense budget compared to the RS 2.1 Billions of RS. This was also agreed between the Pakistani peoples party and the Pakistani-Nawaz Muslim League at a meeting chaired by Prime Minister Shehbaz Sharif.
However, the IMF had indicated 2.42 billions of rupees for defense expenses for the next fiscal year, which was only 12%.
The sources have indicated that the IMF had no problem with the increase in the defense budget, provided that the government has a tax room to finance it without compromising the primary budgetary objective of approximately 2.2 rumors of rupees or 1.7% of GDP.
The discussions take place at a time when the best man in the IMF for the region, Jihaz Azour, was in Islamabad. Jihad held important meetings on Wednesday, notably with the Minister of Finance Muhammad Aurangzeb and some with other high -level dignitaries, sources said.
Jihad should also meet the Prime Minister today (Thursday).
The sources said that to comply with the increased security situation, the defense budget had to be increased by at least a quarter. This would require around 500 billion rupees during this exercise, which was necessary to reconstruct the arsenals. The sources said that additional money was also necessary for the development program of the armed forces and erase certain previous defense liabilities.
For this exercise, 270 billion rupees had been allocated to the development program of the armed forces, which may have to be considerably increased in the light of regional developments, sources said.
Additional financial needs to consolidate the country’s defense must be tested by the provinces. At a meeting with the Prime Minister a few days ago, the Minister of Petroleum, Ali Perviz Malik, had proposed that provincial governments support at least half of the additional defense costs. The provinces are rich and have enormous species surpluses while the federal government is in deficit.
India has attacked the provinces of Punjab and Sindh and it is possible that the provinces are now manifested to carry the cost, said government officials.
The Ministry of Finance also planned to divert some of the unproductive subsidies to meet the additional needs of the country’s defense budget.
During one of the recent meetings, the IMF mission chief underlined the allocation of more than RS1 billion for the energy sector subsidies despite the fact that electricity prices have dropped. But the division of power required more money, the sources said.
The Ministry of Finance can also divert some of the unproductive subsidies given for various regimes in the banking sector to meet the defense needs.
The coalition partners were fighting for more development budget while calling the proposed program of 921 billion rupees for insufficient public sector development for the next financial year. Prime Minister Shehbaz Sharif has already formed a committee to examine the possibility of further increasing the development budget.
The government was planning to increase the development budget to more than 1 Billion of rupees, but the Ministry of Finance wanted to limit it and put money for defense purposes.
The FBR remains the weakest link and a reason for the allowances lower than the allowances required for defense and development. The FBR has missed its tax objectives by large margins and it is almost all the initiatives have turned. Some of the IMF-FBR meetings of this week did not go well due to the inability of the FBR to respect its commitments.
Prime Minister Shehbaz Sharif was a committee on Wednesday to resolve the issue of refineries’ corner reimbursements due to bad tax policies and to inflate perception. It was decided that the oil division will consult the finance division and the income division to finalize the proposal concerning the mechanism of adjustment of the sales tax on refinery products, according to the decision.
It is also necessary to end the unjustified 1% income tax on budget exports after the normal tax regime has taken effect from this exercise.
On Wednesday, Pakistan blamed India for a deadly attack on a school bus.
The Prime Minister’s office said on Wednesday that in an act of reprehensible and cowardly terrorism, a school bus transporting innocent children has been targeted today in Khuzdar, Balutchistan, by proxies sponsored by the State (Fitna al Hindustan) of India that the world has greatly known as epically instability in the region.
The continuation of the raw incapacity to intimidate Pakistan by manifest military means, vile terrorist incidents are orchestrated through their attorney on an intensified scale in Baloutchistan and Khyber Pakhtunkhwa, deliberately targeting civilians in a futile attempt to destabilize Pakistan, according to the Prime Minister’s office.
The vile incident led to the martyrdom of three innocent children and two soldiers and 53 wounded, including 39 innocent children, 8 of whom are critical, according to the government.
Given the increased tensions, the authorities declared that the defense budget of the following year was to be exceptionally increased unique to strengthen the capacities of the army, the navy and the Air Force.
