With Federal Budget 2018-19 set to be announced early, there is curiosity over what the sitting government will do. At the moment, the government seems to have decided that it is going to keep it low-key. Adviser to PM on Finance Miftah Ismail had already confirmed that the budget would be announced on April 27. Addressing the issue on Friday, Ismail explained some aspects of how the outgoing government will approach the budget. The key points from the discussion were that it would announce no new development projects and would cut the budget deficit to 4.5 percent of the GDP. And the budget calculations would be made at the existing exchange rate of Rs115 per US dollar. It is a bit difficult to figure out the budget outline that Ismail has provided. The very scant sketch provided for now suggests that the government has decided against populism in an election year, and is instead set to announce a minimalist budget that would allow the next elected government more flexibility without needing to slash existing budgetary commitments.
Seen in this light, some of the more alarming figures such as the steep cut in development spending could also be seen as done in the right spirit. The development budget is set to go down from Rs1,000 billion to Rs745 billion. Whatever next government comes in will have the opportunity to set its own agenda. But if we accept this position, the lower prediction for budget deficit becomes irrelevant simply because the federal government has accepted that this is an incomplete budget. The admission of incompleteness itself makes it a difficult budget to analysis. One of the key concerns will be how much power is placed in the hands of the caretaker government with the announcement of such a minimalist budget. Through our history, caretaker governments have been prone to taking unpopular economic decisions. Pakistan’s first loan agreement with the IMF was signed by a caretaker government days before the transfer of power from a military to a civilian government in 1988. With the fiscal situation already showing serious signs of weakness after currency devaluation, one would hope that the coming caretaker government will keep itself out of fiscal matters. The economy should remain the terrain of elected officials. This is why it is also uncomfortable seeing technocrats announcing key policies. It will be good if the next elected government retains control over the substantive part of next year’s budget.