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War on terror causing balance of payment problem
 admin May 3, 2010, 03:26:51 AM 

ISLAMABAD: Pakistan will face a serious balance of payment problem next year, partly because the United States has not reimbursed over $1.2 billion the country spent on the war on terror.

A source in the finance ministry told Dawn on Sunday that the government had received $447 million since September 2008, leaving a balance of over $1 billion (Rs80 billion).

Under the Coalition Support Fund, the US reimburses Pakistan for terrorism-related operations, particularly those undertaken by the army and air force.

Analysts estimate the operational cost of war-related expenditures, including sustainability of logistics and garrison in Fata, was over $1 billion per year.

This cost related only to combats in South and North Waziristan and adjoining areas.

The cost of war increased manifold when a major military offensive was launched in lower and upper Dir and Buner.

The government launched an operation in Swat in November 2007, followed by major operations in Bajaur and Kurrum agencies.

Pakistan has deployed more than 100,000 troops in troubled areas.

The government has projected a budget deficit of 4.9 per cent for 2009-10 as against the IMF target of 4.6 per cent owing to rising expenditures on account of debt servicing, huge allocations for defence and law and order.

To overcome the deficit, the government expects to receive more than $4 billion assistance from friendly countries and multilateral donors during 2009-10.

The government has also sought an additional $4 billion as insurance from the IMF in case assistance from friendly countries was delayed.

The source said that the phasing out of subsidies on electricity and other revenue measures, including the levy of carbon surcharge, were attempts to reduce fiscal deficit.

The source said that the amount of reimbursement had been calculated on the basis of six-monthly reports.

He said all the bills related to expenditure were first audited by a team of Pakistan military officers in cooperation with the US embassy in Islamabad.

He said the bills were then sent to the US government’s Accountability Office and Pentagon for further scrutiny.

After clearance from the departments it finally goes to the State Department for release of funds.

‘There was no delay in payment till March 2008. However, the process has been made cumbersome seeking minute details about expenditures.’

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