ISLAMABAD – Pakistani Finance Minister Miftah Ismail announced a big hike in military spending for the next fiscal year on Friday in a budget session.
Opposition lawmakers objected to the ruling Pakistan Muslim League-Nawaz (PML-N) presenting a full-year budget so close to the election and staged a walkout.
Pakistan’s economy has rebounded in recent years due to a drop in militant violence and vast investments by China that have helped alleviate power shortages. Growth is projected to hit a 13-year high of 5.8 per cent in 2017/2018 (July-June) before accelerating to 6.2 per cent next fiscal year.
“Due to historic low interest rates, the business and industry has seen growth, and employment opportunities have been created,” Miftah said.
But a widening current account deficit and dwindling foreign currency reserves have taken some shine off the economic outlook, with the World Bank and the International Monetary Fund (IMF) warning of risks to the economy.
The finance minister said the budget deficit would hit 5.5 per cent for the current fiscal year, missing the government’s fiscal deficit target of 4.1 per cent. He forecast the budget deficit at 4.9 per cent of GDP in 2018/2019.
A government document put the total budget outlay for 2018/2019 at 5.9 trillion Pakistani rupees ($51.06 billion).
Ismail said tax revenues reached 13.2 percent of GDP in 2017/2018, up from 10.1 percent in 2012/2013.
“This unusual increase in tax collection is a very big success,” Ismail said.
A budget document said total tax receipts would reach 4.2 trillion for 2017/2018 – barely missing the official target – and Ismail projected they would jump to 4.43 trillion rupees next fiscal year.
Ismail also set aside 1.1 trillion for the defense budget, increasing it by about 20 percent from the 920 million that the government had budgeted for the military to spend. Revised figures from a budget document suggest military spending will hit 1 trillion this year anyway.