This is a review of main and ancillary Pakistani defence news topics along with short-hand analysis to offer clarity and context: Pakistan announced its defence budget for 2018-2019; the Public Sector Development Program’s (PSDP) budget includes an increased budget for the Space and Upper Atmosphere Research Commission (SUPARCO); and does India’s withdrawal from the FGFA program affect Pakistan?
Pakistan’s Proposed Defence Budget for 2018-2019
On 27 April 2018, the Government of Pakistan presented the Federal Budget for 2018-2019; the budget includes PKR 1.1 trillion (i.e. $9.6 billion US) allocated for defence. Compared to 2017-2018’s defence budget, this is a 19.5% increase. According to The Express Tribune, the Pakistan Army is to receive 47% of the budget, while the Pakistan Air Force (PAF) and Pakistan Navy will receive 20% and 10%, respectively.[1]
According to the Ministry of Finance, 38% of the budget (i.e. Rs. 423 billion) will be spent on ‘employee-related expenses’ (pensions are separate), while 26% and 23% of the budget will be spent on maintaining existing assets (e.g. infrastructure and air/land/sea platforms) and on operating costs, respectively.[2] ‘Civil works’ is drawing the remaining 13% of the defence budget.
Compared to 2017-2018, employee costs drew the highest increase – at 31% – while increases to operating expenses, existing assets and civil works have seen comparatively much smaller increases.
Pakistan did not disclose how much it will be spending on procurement. There are certainly procurement costs considering that there are at least three big-ticket programs in play: (1) the JF-17 multi-role fighter, (2) the Hangor (II)-class submarine and (3) the purchase of three new Saab Erieye airborne early warning and control (AEW&C) aircraft. The installments for these programs will add to Pakistan’s cash outlay, but it is unclear if these have been incorporated into the existing budget or if they are separate.
Overall, an increase in procurement expenses is to be expected. First, the depreciation of the Pakistani Rupee relative to the U.S. Dollar (USD) will necessitate it in order to sustain imports, especially those done in USD. Second, new – and confirmed – big-ticket purchases, such as the one Type 054A frigate[3] announced by the Pakistan Navy in 2017, will add to the actual defence outlay. Should the T129 attack helicopter and MILGEM corvette deals be signed, the outlay will only increase for the coming years.
Satellite Costs: PRSS-1 and PakSat-MM1
Pakistan’s Federal Budget for 2018-2019 also disclosed – through the Pakistan Public Sector Development Program (PDSP) budget – the cost of the Pakistan Remote Sensing Satellite (PRSS-1) and Pakistan Multi-Mission Satellite (PakSat-MM1). The cost of the PRSS-1 and PakSat-MM1 are Rs. 24.26 billion and Rs. 27.58 billion, respectively. In terms of USD, that would be $209.8 million and $238.48 million, respectively.[4]
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