Pakistans hopes of maintaining a budget deficit of 4.9 percent, given budgeted disbursement of development outlay, have been dealt with a serious blow by the US State Department which has signaled a possible halt in assistance if the visa issue continues in the near future.
Pakistani government has reportedly upheld 137 visas of American officials, which USA claims are mostly accountants and support staff. But Pakistans foreign office has asserted that its a routine business and the delay is not deliberate - contrary to Washingtons claim.
US defence budget FY10 allocation of $2.49 billion for security related assistance to Pakistan sounds huge, but it has to be seen in the right context. The Coalition Support Fund, a.k.a. CSF, component of the security related assistance is actually a Pentagon funding to reimburse Pakistan for its support in US military operations.
CSF is officially not designated as a foreign assistance, as wrongly perceived by many analysts. So, in essence, it is Pakistans own money that has to be paid back for rendering its services in the support of US- led war on terror.
It is the Pakistan Counterinsurgency Capability Fund (PCCF) that could actually be categorised as official aid, which US offers in acknowledgement of Pakistans effort to curb terrorist networks in its own territory. Unfortunately, Pakistan has not yet received the staggering $1.6 billion (out of $2.5 bn) in lieu of the security related assistance for FY10 despite bowing to USAs ever increasing calls of do more.
The delay has sent vibes of fear amongst the economic managers of Pakistan whose hopes of foreign inflow on account of FoDP pledges have now dampened. The country has already been pressed hard by the IMF to limit its budget deficit to 4.6 percent, which is highly unlikely as fiscal planning at the time of budget-making had incorporated the multibillion dollar inflows from FoDP, primarily on development.
Therefore, in such times of fiscal constraint, non-materialization of security related funds will be dreadful for Pakistans economy - especially when more than half of it, is the expense which Pakistan incurs for the US only to be reimbursed. It is only now that the US is linking the funds disbursement with the visa delay issue, otherwise a number of US Senators have previously criticized the very nature of the assistance.
It is the ownership of the war by Pakistani government of late that has prompted US Senate to raise doubts on their taxpayers money being used for assisting a country which owns the war - unlike its predecessors. This is contrary to the view of Pakistans general public, as a recent survey by IRI reveals that 71 percent of Pakistanis still think it is the US war which Pakistan is fighting.
The economic managers would be more concerned about the inflows and would want them inside their kitty by hook or by crook. In essence, the visa issuance is a double edged sword, which is likely to create either a financial distress or a much tougher political one.
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Program/Account ($mn) FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 *
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Defence training & equipment - - - 28 14 56 114 -
Counternarcotics Funds - - 8 24 49 54 47 38
Coalition Support Fund 2416 705 964 862 731 967 1000 1280
Frontier Corp - - - - - 75 25 -
Foreign Military Financing 300 75 299 297 297 298 300 298
Military Education & Training 2 3 2 2 2 2 2 4
Narcotics Control & Law Enforcement 122 32 32 38 24 22 88 155
Non-proliferation, Antiterrorism 11 5 8 9 10 10 13 23
Counterinsurgency Capability Fund - - - - - - 400 700
Total security related assistance 2851 820 1313 1260 1127 1484 1989 2498
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Source: US department of state, defense and agriculture *planned assistance
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