Govt cuts military development budget by Rs72bn to unlock IMF loan

July 06, 2022 (MLN): The government has reduced the budget allocated for the armed forces development programme by Rs72 billion in order to achieve a primary budget surplus in the fiscal year 2022-23 which is one of the major conditions of the International Monetary Fund (IMF) for the revival of $3bn program.

Finance Minister Miftah Ismail now hopes to clinch the staff-level deal before the end of this week. Having a primary budget surplus of Rs153 billion or 0.2% of the national output is one of the core conditions of the IMF for the revival of the bailout package.

The original budget that the government tabled in the National Assembly on June 10, 2022, showed Rs363bn allocations for the armed forces development programme. However, the budget provision has been reduced to Rs 291bn as per the revised budget, Tribune reported.

It is the second time in as many years that the armed forces development programme has been slashed due to fiscal constraints and limitations imposed by the IMF, it noted.

For the last fiscal year, the previous government had allocated Rs340bn for this purpose but the actual spending was Rs270 billion, according to the budget books.

An official from the Ministry of Finance said that the armed forces development programme had to be reduced to bring down overall expenditures for fiscal consolidation.

The government has set the primary budget surplus target at Rs153 billion or 0.2% of GDP on the back of Rs750bn provincial cash surpluses. However, the provincial budgets do not reflect the Rs750bn savings and the IMF asked the government to secure the provincial endorsements through a memorandum of understandings (MoUs), it added.

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