Monday, 28 May 2012

The Pakistani Defense Budget- 18 or 80?

Some people claim that Pakistan’s Defense budget is around 80% of its total budget while patriots often point out that its only 18%! Both are wrong. Pakistan’s total budget for the year 2011 was Rs 2767 Billion and out of this, only Rs 500 Billion were allotted for defense, so on the surface, it does look like the defense budget is only 18% of the total annual budget, but a closer look will reveal that’s not the case. 

Military pensions, not included in the defense budget amount to more than 73 billion so we can safely say that the defense budget is actually 573 billion i.e. 20% of the total budget. There’s more however; Pakistan TAX REVENUE is only Rs 1778 billion while the rest is NON-TAX revenue which also includes aid from the US etc. So if we take the defense budget as a percentage of our tax revenues, it’s a whopping 32%!

But that’s not all. We’ve missed two things: the black budget (for the intelligence agencies) and foreign arms purchases. I’ve absolutely no idea about the size of the black budget, but everyone knows that Pakistani intelligence agencies have a huge network and are extremely active so there is no doubt that a large amount of money is spent. In all fairness however, all security agencies which remotely deserve the name of “Intelligence Agency” have black budgets so that’s nothing new.
The other thing is foreign arms purchases. Often, large purchases are done through foreign loans and the interest payments for these loans come under the “Interest on Debt” part of the budget (790 billion) and therefore not included in the defense budget per se.

Whether Pakistan should cut spending on defense or not is an entire debate altogether, but considering everything, I feel it’s wrong to say that Pakistan “doesn’t append a lot” on defense, as young, overly-exited patriots often suggest. In the same vein, it’s wrong to claim that Pakistan spends almost 80% on defense (as a number of people in talk shows are fond of doing).

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