Pakistan, which has received billions from the US to fight terrorism, has a defense budget of about 275 billion rupees. Last year, that amounted to about $4.5 billion. But the weakening rupee means it now is worth $4.1 billion.
Prime Minister Yousuf Raza Gilani noted to lawmakers Monday that the freeze was essentially a cut. He called it “a measure of our tangible display to seek peace with our neighbours.”
Indirectly referring to rival India, he said, “We hope to see a reciprocal gesture from our neighbour for the sake of peace and prosperity of the region.”
After years of sizzling economic growth, Pakistan is now challenged by large trade and budget deficits, chronic power shortages and double-digit inflation.