Pakistan - Defense Spending

Defense spending takes a higher priority than allocating resources for more productive purposes like education and healthcare. That's a consequence of the Pakistani military's obsession with maintaining a military, political and diplomatic competition with neighboring India.

There is a clear political divide in Pakistan — parties that are resisting the role of the military in politics, and parties that do not want to challenge the generals and are prepared to give more space to the military in state affairs. Regional conflict and anti-India narrative give the military domestic hegemony that it uses to protect its strategic and business interests. The business interests of the military and civilians are clashing more than ever. Civilian supremacy would ensure a level-playing field for corporate activities in Pakistan. The military businesses had the upper hand in the form of tax exemptions and countless other benefits.

There were reports that the country's powerful generals demanded that Nawaz Sharif of the Pakistan Muslim League - Nawaz (PML-N) increase their funding, and his relations with the army turned sour after he refused to do so. Sharif, who is a businessman, understood that Pakistan had to take the path of regional cooperation sooner or later. Inability to do so would damage Pakistan's economy and his business interests. The military establishment was against this policy, hence the clash between Sharif and the generals.

Former President Asif Ali Zardari's Pakistan People's Party (PPP) and cricketer-turned-politician Imran Khan's Pakistan Tehreek-e-Insaaf (PTI, Movement for Justice) believed it would be beneficial for them if they collaborated with the military establishment, which was against Sharif's powerful role in politics. After coming to power in August 2018, Imran Khan reportedly increased the military budget.

In 2018 Pakistan spent 1.26 trillion Pakistani rupees ($11bn), about 3.6 percent of its GDP, on its 653,800 troops. It also received $100m in foreign military assistance in 2018. Between 1993 and 2006, more than 20 percent of Pakistan's annual government expenditure was spent on the military, according to estimates from the Stockholm International Peace Research Institute (SIPRI). The military accounted for 16.7 percent of government spending in 2017, it said.

Pakistan announced on 5 June 2015 that it would increase its military spending by 11% for fiscal year 2015-16. The increase would translate into an increase in the country's defense budget from 700 billion rupees (US$ 7 billion) to 780 billion rupees (US$ 7.8 billion)

The Federal Budget for the year 2014-15 amounting Rs. 4.3 trillion was presented before the National Assembly on 3 June 2014. As per the budget document, Rs. 700 billion were allocated for Defence Affairs and Services, also commonly understood as defence budget. This allocation constitutes 16.27% of the total budget and is quite less than the much propagated and misperceived notion of80% or 70%. It has been so for many years as during the financial year 2013-14, share of defence budget was 15.74%,while it was 17.79% during 2012-13.

The myth that allocation for defence is the single largest component in our budget is also not true. For the year 2014-15, Rs. 1,325 billion have been kept for the debt servicing whereas the size of Public Sector Development Programme (PSDP) is Rs 1,175 billion. This was also practiced during 2013-14 when the single largest allocation in budgetwentto PSDP; the second largest to servicing the national debt.

The argument that Pakistan spends a very high percentage of GDP on defence is no longer true. During the year 2013-14, the defence spending was 2.7% ofGDP, which has been so, for many years. Also to note that the allocation for defence barely compensates for the rising inflation which has been sky rocketing in the previous years. The problem of inflation is further compounded with rise in GST which does not carry any special exemption for the defence forces; moreso, the prices of goods, commodities, and equipment are expected to go high in coming days.

Having a close look at the distribution of defence allocation within Pak Army for the year 2013-14, one understands that 64% went to the pay & allowances of the personnel, whereas 17% was allocated for rations, medicaL petroleum & lubricants, dairy Products, transportation, and miscellaneous. 10% was fixed for capital works, major I minor repairs, and utilities i.e. gas, electric and water etc, and 9% of the budget went to general stores & clothing, arms and ammunition.

Faced with the problem of defense against a much larger enemy from a relatively weak resource base, the military must lay claim to a disproportionate share of the nation's resources even to maintain a minimally effective defensive capability. The military was fortunate in that successive governments -- with the exception of the early Bhutto years -- believed it necessary to support the armed services as much as possible. This attitude also persisted among the public at large, who accepted the danger from India as real and present.

From 1958 until 1973, the published defense budget accounted for between 50 and 60 percent of total government expenditures. After that time, the proportions were much lower, falling to 40 and even 30 percent levels and ranging between 5 and 7 percent of GNP. At the same time, however, because of an expanding economy, actual expenditures--even allowing for inflation--showed considerable increases.

The defense budget for fiscal year (FY) 1993 was set at Rs94 billion or US$3.3 billion, which represented 27 percent of government spending and almost 9 percent of the gross domestic product. The published budget understated expenditures by excluding procurement and defense-related research and development as well as funds spent on such activities as intelligence and the nuclear program.

In real terms, Pakistan's defence allocations remained more or less capped since early 2000-01 despite the traditional security challenges vis-a-vis India on the eastern front and the new unprecedented internal security threat in the form of the Al­ Qaeda-linked-and-inspired foreign and local militants, who want to bring down the state and see the armed forces as their number one enemy as it is the main obstacle that can thwart their designs.

According to the latest Economic Survey of Pakistan, all through the 2000s, Pakistan defence budget has remained pegged at 3.1 percent of the GDP, compared with 5.6 percent during the decade of 1990s and 6.5 percent during the 1980s.

If in the fiscal 1992-93 - during Prime Minister Nawaz Sharifs first stint in power - the defence allocations were at the 6.3 percent of GDP, they were later hovering at around 3.0 percent. The pattern of this downward slide in defence spending started during the former military-led government of Pervez Musharraf, who slashed it to 3.9 percent of the GDP during the initial years in power and later to 3.3 percent.

According to World Bank figures for 1988 to 2003, Pakistan’s military expenditures represented 25–29 percent of central government expenditures and 6–7 percent of gross national income. In fiscal year (FY) 2004, military expenditures constituted 18 percent of government expenditures.