Trump proposes to convert US’ grant to Pakistan into loan

Team Udayavani, May 23, 2017, 12:10 PM IST

Washington: US President Donald Trump has proposed in his annual budget to the Congress to convert US’ grant to Pakistan for purchasing of military hardware into a loan, the White House said.

However, the Trump administration has left it for the State Department to take a final call on the issue.

Unlike many parliamentary democracies like India and the UK, wherein the Finance Minister personally delivers the speech on the floor of the parliament, in the US the White House sends hard copies of the President’s budget proposals.

The maiden annual budget of the Trump administration would be submitted to the US Congress later today.

Responding to questions, Mick Mulvaney, Director of the Office of Management of Budget in the White House said the Trump administration has proposed to convert its Foreign Military Funding (FMF) programme to many countries, including Pakistan, from aid to financial loan.

“The Foreign Military Funding or FMF for Pakistan may be provided in the form of a loan,” said Mulvaney.

“This is one of the options that the administration had explored in its internal deliberations, but the request itself does not make that determination,” the White House later clarified, indicating that it might revert back to the original financial grant to Pakistan to sell military hardware if need be.

Whether the funding is provided through grants, or as a subsidy for a guaranteed loan, is an option the State Department can exercise to ensure our foreign assistance best supports US’ national interests, the White House added.

The move is seen as part of the Trump administration’s efforts to cut foreign aid budgets to help pay for increased US military spending.

However, for countries like Israel and Egypt, its military aid would continue to be in the form of grant, Mulvaney said.

The details of the FMF to Pakistan and other countries are expected to be released by the State Department later.
“We do maintain aid to Pakistan in the budget. I don’t believe it’s at the same levels as previous,” he said in response to a question.

“We do change a couple of the foreign military programmes from direct grants to loans. Our argument was instead of giving somebody USD 100 million, we can give them a smaller number worth of loan guarantees and they can actually buy more stuff. We did not change it for Israel. We did not change it for Egypt,” he said.