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Pak increases defence spending

With a battle raging on its disputed Kashmir border with India, Pakistan today announced a 12 billion dollar budget that called for a 2.6 million dollar increase in defence spending.

Defence will be given 2.6 billion dollars compared to last year's actual defence spending of 2.4 billion dollars.

Defence has always been a big ticket item in Pakistan's budget, the cost of which is usually blamed on ongoing hostilities with neighbouring India.

As Finance Minister Ishaq Dar announced his budget in parliament, outside rolls of barbed wire hundreds of policemen in riot gear surrounded the white marble building to stop protesters from staging a demonstration.

The demonstrators were mostly businessmen protesting against sales tax. Also among the estimated 300 protesters were members of Pakistan's right-wing Jamaat-e-Islami party, who accused the government of wasting money and sending prices of staples soaring.

The police fired tear gas at the demonstrators, as well as water canons.

As always in Pakistan the biggest budget item is debt servicing which will devour a whopping 5.4 billion dollars or nearly half of the total budget. This represents a 6.4 per cent increase over last year.

On the development front, which includes this poor country's social programmes, Pakistan will spend 2.19 billion dollars.

According to the budget figures Pakistan fell short on its revenue collection last year. While Pakistan expected to collect 6.6 billion dollars in tax revenue it in fact collected 5.7 billion dollars.

Income tax, which has been difficult to collect in Pakistan, is expected to generate 2.2 billion dollars. Last year income tax generated 1.9 billion dollars, down from the 2.1 billion dollars level that the government expected to collect from income tax.

In Pakistan, a country of 140 million people, less than two million people pay income tax, the biggest defaulters being the country's wealthiest.

This year Pakistan has budgeted a tax revenue of 6.7 billion dollars -- a full one billion dollars more than it was able to collect this year.

The finance minister said Pakistan has come out of the difficulties created by the economic sanctions imposed by the United States and other major donors of aid. ''Now the challenge is to make nuclear Pakistan an economic power,'' he added.

UNI

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