Having a primary budget surplus of Rs153 billion or 0.2% of the national output is one of the core conditions of the IMF for the revival of the bailout package. Finance Minister Miftah Ismail now hopes to clinch the staff-level deal before the end of this week.

The original budget that the government tabled in the National Assembly on June 10 showed Rs363 billion allocations for the armed forces development programme. However, the budget provision has been reduced to Rs291 billion, according to the revised budget that the Ministry of Finance made public after its approval from the National Assembly.

It has cut the armed forces development programme by Rs72 billion or nearly 20%. The allocations are in addition to the regular defence budget. It is the second time in as many years that the armed forces development programme has been slashed due to fiscal constraints and limitations imposed by the IMF.

For the last fiscal year, the previous government had allocated Rs340 billion for this purpose but the actual spending has been shown at Rs270 billion, according to the budget books. Last year, The Express Tribune had reported that the then government decided to reduce allocations for the military’s contingency obligations.

When contacted, an official of the Ministry of Finance said that the armed forces development programme had to be reduced to bring down overall expenditures in a shape where the primary budget surplus target of the IMF could be achieved.

The government has set the primary budget surplus target at Rs153 billion or 0.2% of GDP on back of Rs750 billion provincial cash surpluses. However, the provincial budgets do not reflect the Rs750 billion savings and the IMF asked the government to secure the provincial endorsements through memorandum of understandings (MoUs).