The percentage of Pakistan's GDP that is designated for defense spending decreases to 1.7%. -
The percentage of Pakistan's GDP that is designated for defense spending decreases to 1.7%.
Posted 13 Jun 2024 01:30 PM

Image Source: Agencies

According to budget documents, Pakistan's defense budgetary allocation of Rs 2,122 billion for 2024–25 represents just 1.7% of the nuclear-armed, cash-strapped nation's GDP. However, this figure is higher than the Rs 1,804 billion set aside for the previous fiscal year (2023–24). On Wednesday, Finance Minister Muhammad Aurangzeb presented a heavily taxed budget for 2024–2025 worth Rs 18,877 billion.
According to various budget documents and the speech given by the finance minister, Rs 2,122 billion has been allocated for the upcoming fiscal year, which is 318 billion more than the Rs 1,804 billion that had been budgeted for the previous fiscal year, which began on June 30 and will come to an end in 2023-24. Defense spending as a percentage of GDP has decreased since 2020, as shown by the Pakistan Economic Survey 2023-24, which is a key annual document that shows the budget and economy performance. It is released prior to the budget each year.
It demonstrates that defense spending represented 2.6% of GDP in 2020, but that it decreased to 2.4% in 2021, then to 2.1% in 2022, then to 1.9% in 2023, and finally to 1.7% in 2024. For the year 2025, protection spending has been held at 1.7 percent of the Gross domestic product, showing that there was no adjustment of the portion of the military in the general pie regardless of it getting more cash in the financial plan. According to the document, defense spending has increased from 2.3% of GDP in 2016 to 2.5% of GDP in 2017 and 2.6% in 2018 respectively. From 2018 to 2020, it remained the same at 2.6% before decreasing.
However, due to the fact that a number of military-related costs are included in the budget for civilian expenses, the government's released data may not accurately reflect defense spending. For instance, the Pakistani rupees (Rs.) 662 billion allotted to retired military personnel—roughly 31% of the budget for the armed forces—will not come from the defense budget but rather from the government's ongoing spending. Similarly, it is thought that important military acquisitions or funding for nuclear weapons and missile programs are financed separately, obscuring the precise amount spent by the military. However, the budget document provides some information about the most recent allocation, indicating that the Army has received 47.5% of the budget, the Air Force has received 21.3%, the Navy has received 10.8%, and the inter-services organizations have received 20.3%. It demonstrates that the Army, Pakistan Air Force, Pakistan Navy, and inter-services organizations will receive an identical 22.3% increase in their allocations this year, a rare instance of funding distribution parity. The allocation is broken up into four categories: "Employees Related Expenses," which cover servicemen's salaries and allowances; "Operating Expenses," which cover costs for transportation, fuel, rations, medical care, training, and other essential services; "Physical Assets," which pay for the purchase of arms, ammunition, and related equipment through local purchases and imports; and "Civil Works," which pay for infrastructure maintenance and project financing. Physical assets received Rs 548.6 billion, an 18.8% increase, and operating expenses received Rs 513.3 billion, an 15.6 percent increase, respectively. The civil works category received the largest allocation of Rs 244.8 billion. With a 39% allocation, the ERE (employee-related expenses) head still received the largest portion of the armed forces' budget. The budget was made up of 25.8% for physical assets and 25% for operating costs, while 11.5 percent went to civil works. Because of the exceptional security circumstance of Pakistan and its uncomfortable binds with India, its guard burning through frequently goes under the scanner both at home and abroad.

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