Army’s request for Rs 45 bn will strain Pak economy: Gilani

The team told Gilani about the “prevailing grave economic situation” and difficulties in bridging the ever-widening “gap between national income and expenditure.”

The briefing focused on the consequences of delaying power sector reforms,the fallout of the non-implementation of reforms in General Sales Tax and the army’s request for additional funds.

The Finance Minister met the army chief in Rawalpindi last week to discuss the matter. The Finance Ministry indicated an additional Rs 10 billion could be set aside for the army and this would hike the defence budget to Rs 452 billion,sources said.

The economic team also told Gilani that the only option for overcoming challenges is to quickly implement reforms in General Sales Tax and carry forward power sector reforms.

“The failure to implement the multi-tier power sector reforms would result in an additional burden of at least Rs 214 billion on the budget,” a participant of the meeting told the newspaper.

The government’s budget for 2010-11 allocated Rs 442 billion for defence and an additional Rs 225 billion for military pensions and the war on terrorism.

Reports have suggested that the defence allocation could balloon from Rs 442 billion to Rs 580 billion because of the war on terror and the army’s prolonged stay in the restive tribal belt bordering Afghanistan.