Pak govt likely to hike defence budget by 12 per cent

The "stated" defence budget for 2011-12 is likely to be Rs 495 billion, an increase of Rs 53 billion or 12 per cent over the previous year's "stated" budget of Rs 442 billion, The Express Tribune newspaper quoted its sources as saying.

However, total military expenses are likely to exceed Rs 767 billion, though not all of this amount will be paid by Pakistani taxpayers, the report said.

While the stated outlay will be just over a quarter of the government's targeted tax revenues, the daily said that an analysis of the defence allocation suggests that the "numbers understate the full costs of military spending".

The "stated" budget for the next fiscal will have a rate of increase that is nominally below inflation.

"This, however, masks actual defence expenditures in several ways, including transferring military pensions to civilian expenses and counting security operations separately," the report said.

The government is likely to allocate Rs 216 billion for security purposes under several nondescript headings, which include military operations and are paid for in part by Coalition Support Funds received from the US and grants from the federal government, the daily quoted Finance Ministry sources as saying.

The Finance Ministry shies away from discussing these grants in any detail.
In addition, the military pension bill is likely to be included in the civilian side of the federal budget, continuing an "accounting trick" first employed by the regime of former military ruler Pervez Musharraf.

This move was aimed at lowering the military budget while continuing expenses at the same levels.

For the outgoing fiscal year, the military pension bill came to Rs 60 billion and it is likely to be higher for the next fiscal.

Stated nominal military expenses have risen 29 per cent over the past two fiscal years, almost exactly in line with inflation, despite several military operations against militants in the tribal areas and Swat district.

Independent analysts believe the military allocations may need to be reviewed in light of the May 2 US raid on a compound in Abbottabad that killed al-Qaeda leader Osama bin Laden.