The government increased the defense budget for the current fiscal year by over 6% to over Rs1.45 trillion on Friday in order to meet the armed services’ needs, particularly their higher salary requirements.
The Cabinet’s Economic Coordination Committee (ECC), which approved Rs182 billion in additional grants in total, decided to enhance the defense budget by another Rs80 billion.
The ECC also agreed to impose a 10% regulatory charge on imported gasoline from China in order to prevent abuse of the bilateral free trade agreement. To avoid paying 10% customs fees, some oil marketing companies redirected their imports through China.
The Ministry of Defense had requested an additional Rs80 billion in the defense budget to cover “important gaps,” as well as budget modifications for the Jinnah Naval Base, Naval Base Turbat, and a multi-functional office complex in the headquarters.
The ECC meeting was presided over by Federal Minister of Finance Miftah Ismail, who approved a Rs80 billion supplementary budget for the military forces, or to the extent of the actual additional costs incurred. According to the finance ministry, increased spending in fiscal year 2021-22, which ends on June 30, will be less than Rs80 billion.
Last year, the National Assembly authorized a Rs1.373 trillion defense budget for the current fiscal year. With the increase in the spending ceiling, the defense budget for the upcoming fiscal year may be greater than the previously predicted sum of around Rs1.55 trillion.
In total, the Ministry of Defense received Rs153 billion in this fiscal year, an increase of 11.8 percent over the previous fiscal year’s revised budget, which is equivalent to Pakistan’s average inflation rate. Excluding expenditures on the armed forces development program, defense spending will amount to 2.2 percent of GDP.
The previous administration had given all ranks of the armed forces a 15% special allowance of the running basic salary in July last year, which increased the army budget requirements by Rs38 billion per year.