Unlike India, Pakistan does not publish any service-wise distribution of its defence budget. Due to non-availability of details of the actual allocations for the navy, it is difficult to ascertain its trends. However, some estimates do indicate that, on average, PakistanÃ¢â‚¬â„¢s naval budget has remained below ten percent of the total defence allocations, except in 1965-66 and 1969-70 when the navy obtained 16 percent of the defence allocations. This increase was designed to fund the procurement of submarines (Daphne and Agosta) from France. However, in the late 1990s, the Pakistan NavyÃ¢â‚¬â„¢s budget hovered around 16-17 percent of the total budget. In an interview to JaneÃ¢â‚¬â„¢s Defence Weekly, Admiral Abdul Aziz Mirza, the former Pakistan Navy Chief, noted that in 2002 the Pakistan navy received 25 percent of the countryÃ¢â‚¬â„¢s $US 2.3 billion defence budget.
During 1992-99, Pakistan spent a total of $US 2705 million on military purchases. The navy was the major beneficiary and received the largest allocation of $US 1650 million for procurement ($US 1300 million for three Agosta 90 B submarines and $US 350 million for three Eridian class minesweepers) and $US 150 for modernization of six UK Type-21 frigates. This enhanced interest in the navy was not due to any sudden appreciation of naval requirements. In fact, Admiral Mansoor ul Haq, the then Pakistan Navy Chief, lobbied and convinced the political leadership and the other two services of the NavyÃ¢â‚¬â„¢s urgent needs. He was later charged with receiving kickbacks on major naval purchases and extradited from the US to face trial at home. The Pakistan government has approved plans now to acquire four Jiangwei-II frigates from China Shipbuilding and Trading Company at a total cost of $US 700-800 million.
Pakistan's real defence expenditure remains shrouded in secrecy. Some areas that are not reflected are military pensions, costs of acquisition of major weapon systems, earnings from export of arms and ammunition from ordnance factories and defence credits from various Muslim countries. For instance the initial payment of $ 1.4 billion for the first 40 F-16 aircraft from the US was reportedly made with Saudi money. It is also believed that nearly sixty percent of the weapons and military equipment supplied to the Afghan Mujahideen by the US between 1981 and 1989 was retained/siphoned off in Pakistan. Besides, there are many reports that some rich Arabs have contributed liberally for arms purchases.
Major weapon system acquisitions are not made from the defence budget. These are provided from Ã¢â‚¬Å“off-budget financingÃ¢â‚¬Â¯ via the military wing of the Ministry of Finance. This agency is responsible for managing military procurement as also to carry out cost analyses of the equipment being inducted. Further, it is difficult to determine the exact size of PakistanÃ¢â‚¬â„¢s defence allocations with any reasonable degree of accuracy. The explanatory Memoranda to the Budget also does not provide sufficient details. Lack of transparency in PakistanÃ¢â‚¬â„¢s defence spending allows for camouflaging expenditure under other budgetary heads. Large sums of money are siphoned off for defence from unaccounted sources such as grants/ aid from Islamic countries and proceeds from the narcotics trade. It can be concluded that defence procurement is not included in the respective service allocations and the actual amount of budget would be much higher.
Any analysis of a countryÃ¢â‚¬â„¢s military budget must be located in the context of its national threat perceptions. Even in the realm of military strategy, particular attention is also paid to determine the most likely manner in which this threat is apprehended. In the case of Pakistan, the national leadership had appreciated that the main threat comes from India. Liaquat Ali Khan, PakistanÃ¢â‚¬â„¢s first Prime Minister and Defence Minister, while defending high allocations for defence in the first national budget, noted that defence allocations could be lowered if perceived threats (India) reduced. This has led to an India centric strategy, based on IslamabadÃ¢â‚¬â„¢s realization that India will remain militarily superior in both quantitative and qualitative terms.
For the past several years, PakistanÃ¢â‚¬â„¢s economy has been performing poorly. In 1990-91, the GDP grew at 5.6 percent; it dropped to 1.9 percent in 1996-98 and grew marginally to 2.6 percent in 2000-2001. The Pakistani decision-makers have, therefore, been unable to provide adequate financial resources for national defence, whilst making compromises on social, educational and industrial development.