Pakistan announces budget hike

Islamabad, June 10:

Pakistan announced a big jump in its annual spending plans, hiking civil service pay and funds for education as well as military spending in an election year for both President Gen Pervez Musharraf and his government.

The government announced a record budget of 1.6 trillion rupees ($32.6 billion) Saturday for the year 2007-08, up 21.7 per cent from 1.3 trillion rupees in the current fiscal year, which ends June 30.

Government spending has rocketed in recent years as tax reforms and strong economic growth have yielded bumper revenues. Musharraf, who claims credit for the boom, has used the proceeds for a string of major infrastructure projects, such as dams and roads.

However, critics say the economic expansion has helped a narrow elite and created inflation that makes it hard for the vast majority of Pakistan’s 160 million people to make ends meet. They also criticize continued high spending on the military.

The 2007-08 budget envisages defense expenditure of 275 billion rupees ($4.5 billion), an increase of 10 per cent on the previous year. It includes a 28 per cent hike in education funding to 24.1 billion rupees ($400 million), while the health sector is to receive a 10 per cent increase.

The minister of state for finance, Omar Ayub Khan, said the government will also introduce more subsidies for food items to ease the impact of inflation. Government employees will get a 15 per cent pay rise, he said.