Pakistan military agrees on rare budget cut

Pakistan’s military has agreed in a rare move to cut its budget for a year to help ease the country’s “critical financial situation”, Prime Minister Imran Khan said.

Pakistan has struck an agreement in principle with the International Monetary Fund for a $6 billion loan but Islamabad is expected to put in place measures to rein in a ballooning fiscal and current account deficits to get access to the funds.

The IMF has said the primary budget deficit should be trimmed by the equivalent of $5 billion, but previous civilian rulers have rarely dared to trim defence spending for fear of stoking tension with the military.

Unlike some other civilian leaders in Pakistan’s fragile democracy, Khan appears to have good relations with the generals who have ruled the nuclear-armed nation for nearly half its history since independence in 1947.

Pakistan’s de facto finance chief, Hafeez Shaikh, on June 11 is due to announce spending plans for the financial year beginning in July.

Under Pakistan’s devolved system, the federal government must hand over more than half its budget to the provinces, and the remainder is mostly eaten up by debt servicing and the military’s vast budget.

Mr. Khan tweeted on Tuesday that he appreciated the military’s “unprecedented voluntary initiative of stringent cuts in their defence expenditures” for next financial year because of the country’s “critical financial situation”. This will allow money to be spent on the development of the tribal regions and the Balochistan province, he added.

The previous government hiked military spending by 20% to $1.1 billion, but the military appears to have overshot that figure amid a flare up in tensions with India.

Mr. Khan did not say by how much defence spending would be trimmed.

A military spokesman tweeted that the “voluntary cut” would not be at the expense of security. “We shall (maintain) effective response potential to all threats,” he said.


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