Pakistan's economic woes are deepening, yet the nation appears poised to significantly increase its military spending. This decision raises serious questions about the country's priorities, particularly as it grapples with a severe economic crisis that threatens its stability and the well-being of its citizens.
Pakistan's economy is currently facing a multitude of challenges. The country is burdened by soaring external debt, which has surged to $87.4 billion. This necessitates allocating a significant portion of its GDP, exceeding 1.9%, solely for debt servicing. China is the primary lender, adding another layer of complexity to the situation. The economic survey reveals that Pakistan paid $7.8 billion in external debt service payments in the last fiscal year, with China receiving $602 million despite being the largest lender.
Beyond debt, Pakistan is struggling with low productivity growth, an unsustainable external debt burden, and a persistent energy crisis. The Pakistani Rupee continues to lose value, the prices of essential goods are skyrocketing, and foreign reserves are dwindling. These factors collectively paint a grim picture of a nation in economic turmoil. The World Bank reported that at the beginning of FY24, Pakistan faced a potential economic crisis due to political uncertainty, global monetary policy tightening, and fiscal and external imbalances, leading to pressures on domestic prices and foreign reserves. Measures to manage imports and capital outflows were introduced to preserve reserves, but they disrupted local supply chains, dampened economic activity, and exacerbated inflationary pressures.
Despite these dire economic circumstances, Pakistan seems set to increase its defense budget substantially. While specific figures are still under debate, reports suggest an increase ranging from 18% to 32%. This proposed increase is attributed to the ongoing tensions with India, particularly after recent conflicts that resulted in damage to Pakistani airbases and air defense systems. Some analysts estimate that the recent military escalation between India and Pakistan cost nearly USD 1 billion per hour of combat. While India's larger economy may absorb such shocks more easily, Pakistan has borne a disproportionate burden due to its ongoing fiscal challenges, depleted foreign reserves, and reliance on international financial support.
The decision to prioritize military spending over economic recovery raises serious concerns. Economists and policy experts are debating the wisdom of this move, with many arguing that it could have long-term implications for Pakistan's economic stability and social development. Shifting resources to defense may significantly reduce spending on public services, leaving ordinary citizens to bear the brunt. While Planning Minister Ahsan Iqbal defended the decision by stating that the proposed defense budget hike is necessary to uphold national sovereignty, others warn that this reallocation of funds could hinder progress in social and economic reforms.
Pakistan's relationship with India remains a significant factor in its security considerations. The two countries have a long history of conflict, and tensions have been particularly high recently following attacks and cross-border strikes. However, some argue that focusing solely on the perceived threat from India distracts from the more pressing need to address Pakistan's internal economic vulnerabilities.
Ultimately, Pakistan faces a difficult choice. Investing in its military might provide a sense of security, but it comes at the cost of neglecting its economic foundation. A strong economy is vital for long-term stability and the well-being of its citizens. Without addressing its debt burden, improving productivity, and creating a more stable economic environment, Pakistan risks undermining its future, regardless of its military strength. The nation must carefully consider whether prioritizing military spending over economic recovery is truly in its best interest.
