Pakistan-Afghanistan Update: Pakistan Budget Presented; Announcement Next Week on Afghan Provinces’ Transition

Topline

  • Pakistani Finance Minister Ishaq Dar presented the government’s budget for the upcoming fiscal year in parliament on Wednesday. The fifth and final phase of Afghanistan’s security transition will be announced next week, Defense Minister Mohammadi tells TOLO. Imran Khan has been cleared by doctors to travel to Islamabad to be sworn in as a member of the new parliament. Georgia will close two military bases in Helmand after two bombing attacks in the past two months, but their defense minister says there are no current plans to reduce its troop contributions to the ISAF mission.

Pakistan — Politics and Diplomacy

  • Khan to Take Oath: Doctors have cleared Imran Khan to travel to Islamabad, where he will take the oath of office to begin serving as a member of parliament. In Khyber Paktunkhwa, a cabinet of twelve ministers was sworn in on Thursday after the PTI, Jamaat-e-Islami, and Quami Watan Party reached agreement on a ministry power-sharing formula.

Pakistan — Economics and Development

  • Budget Presented: On Wednesday, Pakistan’s federal cabinet approved the budget for the forthcoming 2013-2014 fiscal year, which will begin in July. Finance Minister Ishaq Dar presented the budget in parliament afterwards. Dawn notes some discrepancies between Dar’s remarks and the budget documents which were filed; Dar said the budget would total Rs 3.59 trillion, compared to an estimated Rs 3.57 trillion in the current budget; the budget documents on the other hand estimate a Rs 3.59 trillion budget for the next fiscal year and Rs 3.48 trillion budget for the current year. Leaders of the PPP, MQM, and PTI have all criticized the budget; debate over its passage is scheduled to begin on Saturday. [Dawn] [ET] [Federal Budget 2013-14]
  • Revenues and Deficits: The projected federal budget deficit totals Rs 1.6 trillion, or around 6.3% of GDP, compared to the current fiscal year, in which the deficit is on track to reach or exceed 8.8% of GDP. Most of the deficit will be financed through domestic borrowing, which Dar acknowledged was crowding out capital access in the private sector. The budget sets a Rs 2.47 trillion tax target, despite failures to meet this year’s goals; it calls for Rs 202.6 billion in new taxes, and the government has set a 9.7% tax-to-GDP ratio target for the fiscal year. The general sales tax will be raised by one percent to 17%, and income taxes will also be raised. Corporate tax rates will be cut by one percent. As part of an “austerity drive”, the government has pledged to cut operating allocations for the presidency and prime minister’s secretariats and for federal ministries by as much as 45%. Although the prime minister’s special discretionary fund has been eliminated, individual members of parliament will retain access to such funds. [Dawn] [ET]
  • Budget Priorities: Rs 1.5 trillion of the budget will be transferred to the provinces under existing National Finance Commission formulas, a 23% increase over transfers that were made during the current fiscal year, which were revised downwards in the face of federal revenue collection shortfalls. Defense spending will increase by over 15%, to Rs 627 billion, or around 16% of the total budget; when military pensions, Coalition Support Fund transfers, and other defense-related budget items are included, total defense spending is equivalent to at least Rs 1.01 trillion, or around 28% of the total budget. Spending on law enforcement agencies was increased 11.5%, to Rs 65.24 billion. Allocations to the federal Public Sector Development Program account were increased by 50%, to Rs 540 billion, the largest portion of which is reserved for energy sector investments. Total allocations for higher education were Rs 57.4 billion; for federal health programs, Rs 35.6 billion. The Express Tribune notes several small programs aimed at boosting employment opportunities and offering stipends for students and recent graduates seeking jobs. The Benazir Income Support Program cash grant program has been renamed as the “Income Support Program”, but its allocation was increased to Rs 75 billion, rather than decreased as some accounts had suggested prior to the budget’s unveiling; the PPP has protested the name change. Retired government and military employees’ pensions will be increased by 10%, but no increase in salaries for civil servants has been budgeted; there are reports of planned protest strikes for Friday. [ET] [Dawn]
  • Energy Crisis: The budget plans for Rs 220.1 billion in energy subsidies, Rs 150 billion of which is intended to offset the difference between the cost of production and energy tariff rate; in the previous budget, Rs 120 billion had been allocated for that purpose, but actual expenditures reached approximately Rs 250 billion. The overall budget includes Rs 252 billion in investments intended to pay for the conversion of two gas-powered plants to coal, and the construction of two new coal plants; approximately Rs 200 billion of this is to be provided by Asian Development Bank loans. Although the government has vowed to continue with the construction of the Iran-Pakistan gas pipeline, McClatchy notes that the budget does not allocate funds for that purpose.

Pakistan — Remainders

  • Supreme Court Calls for Special Commission to Make Appointments to State-Owned Industries and Agencies [ET]
  • ‘Signs of Tussle’ Between Foreign Affairs Advisors [Dawn]
  • Election Commission Orders Re-Polling in NA-103 Hafizabad [ET]
  • Maulana Sufi Mohammad Hospitalized [ET]
  • Army Officer Killed in Tirah Blast [Dawn]
  • Musharraf Formally Arrested in Connection to Bugti Case; Remains Under House Arrest [Dawn] [Dawn]
  • Four US Embassy Officials Briefly Detained at Karachi Airport [Dawn]

Afghanistan — Security

  • Transition Phase to Be Announced: Afghan Defense Minister Bismillah Mohammadi said that the fifth and final phase of the transfer of responsibility for security operations in Afghanistan will be announced next week.
  • Georgia Closes Helmand Bases: Georgia’s Defense Minister Irakli Alasania, making a visit to Afghanistan on Wednesday, announced that his country had closed two operating bases in Helmand, following two bombing attacks that killed ten soldiers in May and June. Alasania said that Georgia had no plans to reduce its commitment of approximately 1,500 troops in Afghanistan, however.
  • Insider Attacks: Six Afghan policemen were found dead at a checkpoint in Helmand, with two of their colleagues missing, provincial officials reported on Thursday; the Taliban claim to have recruited the missing officers to carry out the attack. [AJE]

Afghanistan — Remainders

  • After Remarks from VP Fahim, Afghan Political Parties Warn Against Efforts by Government to Stay in Power [TOLO]
  • Governors Criticize Incomplete Development Projects [TOLO]
  • Taliban Forced School Closings in Southern Afghanistan After Motorbike Ban, UN Reports [Guardian]
  • Bombing Kills Soldier and Civilian in Helmand [TOLO] [AP]
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