Pakistan increases defense budget by 6% to $8.8 billion

The Pakistani government has announced its intention to increase defense spending in FY2021/22. up to 1.37 trillion Pakistani rupees ($ 8.78 billion).

The Pakistan government has announced a defence budget of PKR1.37 trillion (USD8.78 billion) for fiscal year (FY) 2021–22. The allocation is a 6.2% increase over the original 2020–21 defence expenditure of PKR1.29 trillion.

The new defence budget will represent about 16% of the government’s total expenditure for 2021–22 and has been announced against the backdrop of Pakistan’s improving economy. In 2020–21 the country’s GDP is forecast to climb by nearly 4%, despite the ongoing Covid-19 pandemic.

The bulk of Pakistan’s defence budget is allocated to Defence Services, with a small amount for Defence Administration. The largest expenditure in the former appropriation is employee-related expenses, which in 2021–22 receives PKR481.6 billion, a 1% year-on-year increase.

Defence Services also includes physical assets and operating expenses, which in 2021–22 receive PKR391.5 billion and PKR327.1 billion, increases of 9% and 8% respectively. Expenses for civil works is PKR169.7 billion, while Defence Administration receives PKR3.27 billion.

In terms of the armed services, the Pakistan Army will receive PKR651.5 billion in 2021–22 (or nearly 48% of the total), while the Pakistan Air Force and Pakistan Navy have been allocated PKR291.1 billion and PKR148.7 billion (or 21% and 11%) respectively. The majority of the remainder is allocated for defence-wide requirements.

In a separate appropriation, Pakistan’s Defence Production Division, which supports the national defence industry, will receive PKR1.74 billion in 2021–22, an increase of nearly 11%.

The proposed defence allocation for the next fiscal year has a special context — on the one hand, the government claims that the economy is improving and tensions with arch rival India have been somewhat managed after the initiation of the backchannel talks and, on the other, the US forces are quickly pulling out of Afghanistan and it is feared that violence among the warring groups could intensify in the absence of a political settlement and Pakistan could face the spillover of instability there.

The army as always has the biggest share of the pie with Rs651.5bn (47.55 per cent), Pakistan Air Force will be given Rs291.2bn (21.26 per cent), Pakistan Navy will get Rs148.7bn (10.85 per cent), and inter-services organisations are being allocated Rs278.5bn (20.32 per cent).

Meanwhile, last year’s figures for defence budget have been revised. The original allocation for FY2020-21 was Rs1.29 trillion, which has been increased to Rs1.33tr, meaning the armed forces overspent by about three per cent.

© 2021, GDC. © GDC and www.globaldefensecorp.com. Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to www.globaldefensecorp.com with appropriate and specific direction to the original content.