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| June 1, 2005 | Wednesday | Rabi-us-Sani 23, 1426 |
Defence expenditure to surpass target
ISLAMABAD, May 31: The country’s defence expenditure at Rs146.44 billion during the first nine months (July-March) of the current financial year is set to surpass the target while development expenditure at Rs137.9 billion may remain short of target. Pakistan’s budget deficit during the period at Rs131.3bn seems within the annual target, official figures released by the finance ministry suggest.
To meet the deficit, the government borrowed Rs100.77 billion from foreign financing and Rs30.5 billion from domestic market during the first nine months of the current year. The domestic borrowing included Rs5.8 billion from the banking sector and remaining Rs17.2 billion from non-banking sources.
Current year’s budget deficit had been estimated at Rs199 billion, defence expenditure at Rs193.9 billion and development expenditure at Rs202 billion. Interest payments amounted to over Rs150 billion.
The statistics suggest the government realised about Rs22 billion on account of surcharges on petroleum and gas owing to higher international rates. Privatization proceeds stood at Rs7.5 billion.
Of the Rs137.8 billion development expenditure, federal releases amounted to Rs83.7 billion and provincial releases stood at Rs54 billion.
The official figures suggest that total revenue has amounted to Rs634.9 billion or 10.30 per cent of the GDP while tax revenue stood at Rs455.3 billion or 7.4 per cent of the GDP. Of this, CBR revenue in the first nine months amounted to Rs403.3 billion or 6.5 per cent of the GDP. Of the Rs22 billion surcharges on petroleum, Rs12.5 billion came on account of gas and Rs9.2 billion in petroleum surcharge.
Total expenditure during the first three quarters of the current fiscal year amounted to Rs766.2 billion or 12.43 per cent of the GDP while expenditure booked stood at Rs789.2 billion. Of this, the current expenditure amounted to Rs647.9 billion or 10.5 per cent of the GDP.
On the expenditure side, an amount of Rs263 billion was spent on general public service, including Rs123.3 billion for domestic debt servicing and Rs27 billion for foreign debt servicing. Superannuation allowances and pension expenditure during the first three quarters amounted to Rs25.3 billion, while health related expenditure stood at Rs2.6 billion.
With the current pace of spending, the defence expenditure is expected to easily cross Rs200 billion at the end of the year against a budgetary allocation of Rs194 billion, sources in the finance ministry said.
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 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 sources said the defence budget as 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.
They said the defence budget which constituted 18 per cent of the total federal budget in 2001-02, rose to 20 per cent in 2002-03 and 2003-04 and increased to 21 per cent for the current year’s allocations.
The sources said the defence related pensions were removed from the total allocation in 2002-03 budget and since then they were not reflected in the defence budget. The official 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 the respective 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.
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