The International Monetary Fund (IMF) has instructed the Shehbaz Sharif administration to reduce its defence spending in order to restart a delayed loan program as a result of the impasse between Pakistan and the IMF over important issues.
A source in Pakistan’s finance ministry claims that the government is concerned about the IMF’s “rigid and tough demands”, which include an audit of defence expenditures.
Key modifications have been suggested by the IMF group, which is now in Pakistan, including the inclusion of defence pensions in the defence budget.
Defence Pension Budget Since Gen. Pervez Musharraf (R) Administration
Since the General Pervez Musharraf (R) administration, the annual pension costs for military personnel have been listed in the budget as civil expenditures totaling more than Rs. 400 billion.
Currently, the military takes up 26% of Pakistan’s national budget, followed by debt service at 50%.
In an effort to control public spending and plug its gaping budget holes, the IMF had also requested that the Sri Lankan government reduce the size of its military forces over the course of the year.
The Sri Lankan Ministry of Defense claims that as a result of the change, the army will decrease from 185,000 to 135,000 by the following year.
By 2030, it will be further reduced to 100,000. The IMF has also criticized Sri Lanka’s budget for 2023, which includes Rs. 539 billion for defence.
Other conditions put out by the IMF for Pakistan include a rise in the petroleum levy, a more accommodating exchange rate, new levies to make up for lost revenue, and higher electricity and gas prices.
According to reports, gas prices could rise by up to 60%–70% and electricity rates may rise by 30% in Pakistan.
From its current level of 35% to 40%, inflation is predicted to rise by another 5% to 10%.
On January 28, the State Bank of Pakistan released the dollar at market value, which caused the value of the rupee to fall to Rs. 270 within Pakistan and to Rs. 280 plus outside.
Since the modifications were announced on February 1, the government would likely make an extra Rs 4.5 billion in three days.
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