By Anup Katiyar
Amidst mayhem that included hurling of chairs and the choicest expletives in the Pakistani Parliament – a third world country living on loans from the IMF, unable to guarantee the basic necessities of life to its people, and now allegedly selling brides to hungry Chinese men – passed its defence budget without any parliamentary debate.
Truth of Pakistan’s Defence Budget
On a more serious note, Pakistani economist and former member of the Prime Minister’s economic advisory panel, Sakib Sherani explicitly discusses the macro-economic picture in the daily Dawn, “Pakistan has been struggling with low economic growth for three decades. Since 1990, real GDP growth has averaged 4.2 per cent. By comparison, South Asia has averaged economic growth of 6% over the same period. In the past three years, Pakistan’s annual GDP growth rate has fallen even further to an average of 1.9%, due to the combined effects of the 2018 balance of payments crisis and the Covid-19 pandemic.”
The credibility of the budget has also been called to question. The doyen of economists in Pakistan, Hafiz Pasha, suggests old fashioned figure fudging to present a rosy picture of the economy, something that defuses some of the political pressure on the Imran Khan government and also helps it to negotiate softer terms with the IMF.
Notwithstanding these substantial arguments on the credibility of the data, this article aims to highlight the fact elucidated by the Indian commentator, Sushant Sareen, who expounds, “even if the Pak federal government is able to get the entire budgeted net revenue of PKR 4.5 trillion, it still doesn’t solve the problem. Almost the entire net revenue is accounted for by debt servicing of PKR 3.1 trillion and defence expenditure of PKR 1.37 trillion”. The rest of the Government expenditure will be undertaken through raising additional debt – and this is where the aforementioned IMF has to step-in.
So, even in this bleak economic scenario, the fact that should be noticed is that Pakistan has managed to increase the defence budget by 6% with an announced budget of PKR 1.37 trillion (USD 8.78 billion) for fiscal year (FY) 2021–22. As mentioned above, this allocation will represent about 16% of the government’s total expenditure for FY 2021–22.
For some inexplicable reason, Prime Minister Imran Khan tweeted that the Pak Armed Forces had voluntarily sought a cut in their spending, but the allocations above indicate a palpable increase. In addition, this military expenditure amounts to 2.6% of Pakistan’s projected GDP for the next fiscal. In terms of a GDP based comparison, this is more than what ‘existential threat’ India spends on its military which has been languishing at about 2.16% of the GDP for nearly a decade and also more than ‘all-weather brother’ China which assures the comity of nations that it has restricted defence expenditure to 1.3% of GDP.
Addressing the Guns v/s Butter argument, Dr Farah Naz justifies the share of expenditure writing in the popular Pakistani daily The Nation, “Pakistan’s current security environment faces various challenges that includes challenges at the western front, eastern front as well as facing domestic terrorism”. Like many other Pakistani strategic analysts, she seeks a greater allocation saying that this meagre outlay is insufficient to meet the strategic requirements of Pakistan. In addition, it is quite certain that like the previous fiscal, the Pak Armed Forces will receive additional allocations at a later stage in the fiscal year.
So what will each service get? Writing for the Janes, Andrew Macdonald highlights “In terms of the armed services, the Pakistan Army will receive PKR 651.5 billion in 2021–22 (or nearly 48% of the total), while the Pakistan Air Force and Pakistan Navy have been allocated PKR 291.1 billion and PKR 148.7 billion (or 21% and 11%) respectively. The majority of the remainder is allocated for defence-wide requirements.” Further Macdonald appends, “In a separate appropriation, Pakistan’s Defence Production Division, which supports the national defence industry, will receive PKR 1.74 billion in 2021–22, an increase of nearly 11%.”
What are the major projects that are being funded through the Pak budget?
The Pak Army which traditionally gets the lions share, is looking at the upgradation of its mechanised forces and artillery. Unhappy with the locally made Al-Khalid tank, the Pak COAS visited Ukraine in end May 2021 and was seen reviewing the Ukrainian T-84 ‘Oplot-M’ MBT. The Pak Airforce is wedded to the JF-17 fighter and looks towards China to meet future requirements. There is certainty in the fact that the PAF is covertly receiving some soft loans from Chinese Banks to fund the acquisition for the JF-17s which is locally assembled from engines and avionics of Chinese make. That leaves the Pak Navy which aspires to complete the acquisition and retrofitting through European vendors of ten Embraer Lineage platforms into the ‘Sea Sultan’ LRMP to replace the PC3 Orion’s delivered by the USA in 2012-14. The PN is also likely to Commission the first of class Type 054 frigate from China again probably through soft loans from China’s EXIM Bank. Reports also allude to the fact that the PN is probably tired of unreliable Chinese weapons and has ordered warships built in Turkish shipyards for $1.5Billion for which staggered payments are being made from the current budget.
Drawing lessons from the Armenia-Azerbaijan conflict, the Pak armed forces are also looking towards the acquisition of drones. Here, as revealed by Sara Scorcher in the National Journal, “the earlier Pak investment in handing over crashed/ damaged US drones to China’s has helped as the Chinese Rainbow CH-3 UAV is known to have benefited from reverse-engineering of U.S. drones, and this technology was also transmitted back to Islamabad for Pakistan’s nominally indigenous Burraq and Shahpar UAVs”.
Whilst the projects enumerated above are not all inclusive, but it does show that the Pak Armed Forces still retain that innate desire to match up with their traditional rivals – India. Policy makers tend to lower monetary provisions and approvals for acquisitions when a cease-fire is holding in J&K. But then, it is the wise who keep their powder dry and prepare for an uncertain future.
