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Pakistan PM says defense spending to be suspended

Pakistani Premier Yousuf Raza Gilani said the government would freeze defense spending in the upcoming budget, state media reported yesterday, as the country tries to tackle growing economic problems.

Nuclear-armed Pakistan, a key ally in the US-led “war on terror,” spent 275 billion rupees (US$4.1 billion) on defense during the current fiscal year ending on June 30, up from 250 billion rupees in the previous year.

“The government has decided to freeze the allocation for defense in the next national budget as a measure of Pakistan’s tangible display to seek peace with neighbors,” Gilani told parliament late on Monday according to state media.

Gilani said that in effect the defense budget would be “reduced in the context of inflation and rupee-dollar parity,” the official Associated Press of Pakistan news agency reported.

Without actually naming neighboring nuclear rival India, he said that he expected a “reciprocal gesture from our neighbor for the sake of peace and prosperity of the region.”

India and Pakistan, who have fought three major wars since independence from Britain in 1947, launched a slow-moving peace process in 2004.

Gilani added that “the defense ministry and the chief of army staff have fully endorsed the revised format of the defense services budget estimates.”

Pakistan has witnessed strong growth in recent years, backed by an influx of US aid, but global economic issues coupled with domestic political turmoil over the fate of President Pervez Musharraf have hit hard this year.

The state bank raised interest rates 1.5 points to 12 percent in May in a bid to curb soaring inflation. The bank said inflation was set to hit 11 percent this year, double the target of 6.5 percent.

Anger is mounting among the country’s 160 million people over shortages of food and other commodities, coupled with frequent power outages, factors that contributed to the defeat of Musharraf’s backers in February.
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