Austerity measures unveiled in Pakistan’s budget

[Hannah Bell]

The Pakistan Peoples Party (PPP)-led government presented a budget on June 6 that continues the unpopular International Monetary Fund (IMF) program of cutting public expenditure and increasing taxes. Finance Minister Abdul Hafeez Shaikh openly declared that the “focus of this budget is on austerity”...

IN the context of the sovereign debt crisis developing globally, the bankrupt Pakistani government has no room to manoeuvre. Pakistan was forced to obtain an IMF bailout loan of $US7.6 billion loan in 2008 to avert a balance of payment crisis. The loan was later extended to $11.3 billion. The IMF withheld the third instalment in February because its conditions were not observed, but later released it after the military extended its offensives in the tribal areas along the Pakistan-Afghanistan border.

Debt servicing and military spending together consume 45.5 percent of expenditure. The allocation for defence will increase by 17 percent to 442 billion rupees ($5.2 billion), or 13.5 percent of the budget... Pakistan’s debt servicing bill next year will reach 873 billion rupees, or 32 percent of budget expenditure, up from last year’s 30 percent...

By contrast to the defence budget, the allocation for health— just 17 billion rupees— was cut by 27 percent from last year. Total health expenditure is only 0.7 percent of GDP. Education spending will rise marginally by 3 billion rupees to 34 billion, or 2.3 percent of GDP, even though a little less than half the population is illiterate...The government is preparing further public sector “reforms,” including privatisation...

http://www.wsws.org/articles/2010/jun2010/paks-j16.shtml