It has been reported in the Business Recorder that during the Cabinet meeting, the previous Government's procurement of Swedish military technology as well as JF-17 from China for which 38.5 billion out of a total cost of 75 billion rupees has already been paid was discussed.
These purchases were not part of the defence budget, thereby raising the allocation in the federal budget by almost 27 percent. The impact of such a significant rise in defence spending, for which provision was not made in the budget, must account for part of the rise in the fiscal deficit which, in turn, has repercussions for the rate of inflation.
The fiscal deficit as a percentage of GDP was projected at 4 percent by the previous economic managers for 2007-08 and is now projected at 9.5 percent - more than double its original projection.
This must be a lesson for future governments who must ensure that all anticipated expenditure must form part and parcel of the budget and only unforeseen expenditure, for example, of the nature of a natural catastrophe, be considered as expenditure outside the realm of the budget; though several governments as well as international financial institutions are becoming wary of a growing number of natural catastrophes each year and are debating setting aside an expenditure item dedicated to natural calamities.
National security consideration has invariably been invoked to pre-empt the desire of many civilian governments to usher in an era of accountability into military spending. Critics argue that all defence purchases are routinely published by several international journals, including Jane's Defence Weekly, and that the insistence of the armed forces not to reveal the details in the federal budget has to be seen in the context of their reluctance to allow domestic civilian oversight.
In addition, with constant demands by bilateral as well as multilateral donors to reduce overall defence spending, some of the total outlay for the military is now hidden under other items and hence total military expenditure for the year remains an under-estimation - an under-estimation that makes comparison with India difficult.
India, as is well known, drives our defence expenditure to a large extent and spent 1.99% of its much larger GDP on defence last year while Pakistan spent almost 3.1% of its GDP with, as aforementioned, some military expenditure remaining hidden under other heads as does India's, but the difference is that all their expenditure is with the consent of the parliament/cabinet.
This heavy outlay on defence seriously undermines the capacity of the government to meet its social sector obligations and Pakistan's literacy rate and health care remain poor even in comparison to other countries in the region. This is not to say that our national security needs should always be met without hesitation but with full parliamentary oversight ensuring civilian control over the armed forces.
In marked contrast to Pakistan, India provides details of its defence spending in the budget. Noteworthy amongst Indo-Pak differentials are the 38 cases relating to arms agreements that are pending against the bureaucrats and military officials of India. One would hope that the new government makes a change from the past and makes defence expenditure more accountable, transparent and subject to parliament's scrutiny.
For the first time in Pakistan's history, hope for change seems well placed. Chief of Army Staff General Kayani has already begun the process of depoliticizing the army and its personnel. And some members of the newly elected government have already gone on record to express their reservations about military spending.
For example, the newly appointed Information Minister, Sherry Rehman, wrote in June of 2005: "Given the constant talk of transparency and good governance emanating from the government, it is not just surprising but shocking that the defence budget in Pakistan remains above public scrutiny as well as the law.
If lawmakers in Pakistan cannot discuss, let alone question the allocations and management of this chunk of the country's wealth, then it is clear that once again, almost 30 percent of the budgeted amount will remain out of Parliament's purview. This in turn means that the army's business interests will also remain outside the public accountability mechanism." It is hoped that the new government will set a new precedence in this regard.
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