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Soldiers

Special Relief Allowance for Armed Forces Amid Fiscal Reforms in Pakistan

Strategic Insights

— 2 min read

The Ministry of Finance has announced a special relief allowance for the armed forces in the next fiscal year. According to the plan, officers will receive 50% of their basic salary as allowance, while junior commissioned officers and soldiers will get 20%. The announcement was made during a parliamentary committee briefing by the finance secretary, but the ministry declined to disclose the full financial cost despite concerns raised by opposition members. Simultaneously, the public sector development budget has been reduced from Rs1.1 trillion to Rs967 billion, sparking worries that even this amount may not be fully spent before June 30.

Key Takeaways:

  • The Ministry of Finance has approved a special relief allowance for the armed forces, with officers receiving 50% of their basic salary and junior commissioned officers and soldiers getting 20%.
  • The public sector development budget has been reduced from Rs1.1 trillion to Rs967 billion, with concerns that the amount may not be fully spent before June 30.
  • The government expects about $1 billion in foreign inflows this month through a syndicated bank arrangement backed by the Asian Development Bank.
  • Foreign reserves could rise to $14 billion by June's end if the expected foreign inflows materialize.
  • The government plans to raise Rs1.468 trillion next year through the petroleum development levy, up from Rs1.161 trillion this year.
  • Petrol and diesel will now carry an average levy of Rs80 per litre, with no upper cap on the levy.
  • The government aims to decline the policy rate to single digits by year-end, as inflation improves and the fiscal position stabilizes.
  • Lawmakers have expressed concern over the low tax-to-GDP ratio, solar panel taxes, slow privatisation, and falling industrial and agricultural growth.
  • The parliamentary committee has highlighted problems such as border smuggling, weak customs enforcement, and taxes on bank transactions, urging reforms to improve efficiency, transparency, and social protection programs.

Statistics:

  • Public sector development budget: reduced from Rs1.1 trillion to Rs967 billion.
  • Foreign inflows expected this month: $1 billion through a syndicated bank arrangement backed by the Asian Development Bank.
  • Foreign reserves at June's end: could rise to $14 billion if expected foreign inflows materialize.
  • Petroleum development levy: Rs1.468 trillion next year, up from Rs1.161 trillion this year.
  • Average levy per litre on petrol and diesel: Rs80.
  • Projected GDP growth rate: 2.7%.

Sources:

  • Parliamentary committee briefing by the finance secretary
  • Ministry of Finance announcement regarding special relief allowance for the armed forces
  • Press briefing by Finance Minister Muhammad Aurangzeb

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