Days after the change of command in the armed forces, the Ministry of Defence has sought additional funds from the federal budget to cope with the impact of rising fuel cost and overall inflation.
The demand was put forth by Defence Secretary retired Lt Gen Hamood-uz-Zaman Khan during a meeting with Finance Minister Ishaq Dar on Thursday.
“Defence and economic issues together with security-related budgetary matters were discussed during the meeting,” said a statement issued by the Ministry of Finance.
The development comes only a month after the Economic Coordination Committee of the cabinet approved a Rs31 billion supplementary grant for the defence ministry, on Oct 28.
In October, ECC approved Rs31bn supplemantary grant for General Headquarters
Informed sources said the defence team told the finance minister that it had already been following strict austerity measures but inflation, particularly POL expenses, was putting an additional pressure, thus causing a financial shortfall. According to them, there was little room within the allocated funds to meet the additional financing requirements.
The statement quoted Mr Dar as highlighting the economic outlook and fiscal position of the country and various measures taken by the government to stabilise the economy. He said the results of these measures would soon be reflected in the strengthened fiscal position and enhanced economic activities.
Prime Minister’s Special Assistants on Finance and Revenue Tariq Bajwa and Tariq Mehmood Pasha, special secretary finance and senior officers from the finance and defence divisions attended the meeting.
The government is currently facing almost Rs1 trillion slippages on fiscal account, chiefly because of increase in interest payments amid devaluation and higher interest rates, besides flood-related expenditures. The finance ministry is already struggling to convince the International Monetary Fund (IMF) to complete the 9th review of its $7bn ongoing programme.
The Fund wants more taxes and tight expenditure controls to ensure tax-to-GDP ratios committed under the programme structure before it clears disbursement of $1.18bn tranche that was due early last month.
The government has decided to slash down the country’s development budget by more than half to Rs350bn from the budget allocation of about Rs800bn for the current fiscal year.
The defence secretary thanked the minister for his cooperation, according to the statement.