Finance Minister Abdul Hafeez Shaikh said in his budget speech: “We live in a difficult neighbourhood. We are faced with threats to our security. We remain engaged in a struggle for the safety of our citizens. We are the victims of war on terrorism.” - Photo by AFP

ISLAMABAD: The government has increased the allocation for defence services by about 12 per cent to Rs495 billion for 2011-12.

According to budget documents, the allocation for the next fiscal year is Rs53 billion more than the Rs442 million originally earmarked for last year.

Finance Minister Abdul Hafeez Shaikh said in his budget speech: “We live in a difficult neighbourhood. We are faced with threats to our security. We remain engaged in a struggle for the safety of our citizens. We are the victims of war on terrorism.”

After the announced increase, Pakistan, according to the Stockholm International Peace Research Institute’s database of military expenditure, would rank among the top 30 spenders on defence.

During the current financial year the military expenses overshot the allocation by about Rs25 billion.

In terms of the GDP share, defence allocation for the next year would go down to 2.4 per cent from 2.6 per cent this year.

There has been a steady decline in defence services’ slice in the GDP cake over the years.

Seen in real terms, the defence budget has reduced marginally because of inflation, which averaged 14.1 per cent, a 15 per cent raise in salaries and pensions of troops and increase in fuel prices.

Earlier reports had suggested that military had sought an allocation of over Rs500 billion, but the government could not do it because of the financial crunch and poor economic growth.

The finance minister rejected doubts being raised about the competence of the military in the wake of recent incidents, saying it had rendered sacrifices in the fight against militancy.

Details about defence spending were as usual scant and broadly categorised under heads like employee expenses (Rs206.5 billion), operating expenditures (Rs128.3 billion), physical assets (Rs117.6 billion) and civil works (Rs42.6 billion).

Traditionally, budget documents mention a single-line defence allocation with no breakdown. In the absence of detailed information on military spending it is not clear if allocated funds are used for specified purposes or are subsequently re-appropriated.