Pakistan to raise defence spending by 15.3 percent

By Zeeshan Haider

ISLAMABAD (Reuters) - Pakistan will increase defence spending by 15.3 percent in the 2009/10 fiscal year as it battles Taliban insurgents in the northwest on the border with Afghanistan.

Pakistani forces launched a major offensive in late April to expel Taliban from the Swat valley and neighbouring districts northwest of Islamabad, and have in recent days stepped up attacks on the militants on the western border.

Defence spending is set to rise to 342.9 billion rupees ($4.2 billion) for the 2009/10 fiscal year beginning on July 1, compared with 296.07 billion rupees allocated in 2008/09.

"Pakistan today is not only a front-line state in the war against terrorism but is also battling militancy and terrorism inside the country," Minister of State for Finance Hina Rabbani Khar told parliament in her budget speech.

"We have already paid an economic price of more than $35 billion in the war against terrorism ... we are facing huge expenditures to get rid of militancy," she said.

Pakistan raises its defence spending every year because of its historically uneasy relations with old rival India, with which it has fought three wars since their independence from British colonial rule in 1947.

Talat Masood, a retired general turned security analyst, said India would remain a security concern as long as the nuclear-armed neighbours fail to resolve differences, in particular their core dispute over the divided Kashmir region.

But he said much of the increase in the defence budget in the new fiscal year would be spent on the fight against Islamist militants.