Money Matters

‘Budgeting in uncertainty’

Money Matters
By Zeeshan Haider
Mon, 05, 21

The finance ministry babus and other government officials must be holding meetings behind closed doors in Islamabad to firm up proposals for the budget for FY 2021-22.

The finance ministry babus and other government officials must be holding meetings behind closed doors in Islamabad to firm up proposals for the budget for FY 2021-22.

The government has not yet announced the date for the laying of the budget before the National Assembly, but most probably it will be announced in the first half of June.

It would be the fourth budget of the PTI-led coalition and the first by the Finance Minister Shaukat Tareen in the present government.

The finance minister has not defined the contours for the next budget, but as per his remarks in the media after assuming office, it is safe to assume that the budget would not strictly be in line with the assurances given by his predecessor, Hafeez Sheikh, to the International Monetary Fund (IMF) when resuming $6.6 billion loan agreement. The IMF’s Extended Fund Facility was signed by the PTI government after assuming the office.

From the very outset, the finance minister made it very clear that he would renegotiate the terms of the IMF deal as Pakistan at this stage could not afford to continue with the stabilisation measures like strictly maintaining fiscal discipline and painstaking reforms in the power sector that include sharp increase in the power tariff as suggested by the IMF. He stressed that Pakistan now urgently needs to get into growth mode to overcome underemployment and make the wheel of the economy going.

In layman jargon, the government needs to take some populist measures to give some relief to masses who for the past three years have been braving very high inflation.

The emerging political situation in the country also requires the government take popular measures as practically it has entered into electoral mode.

Those who have been closely watching Pakistan’s economic policies over the past four decades would testify that the PTI government is falling back to tried and tested methods in the hope of fixing the economy.

Every government in the past forty years has been juggling with stabilisation and growth-oriented economic policies during their stints in power, thus leaving a mountain of problems for its successor.

Every government has to get into an IMF programme at the start of its tenure to ward off a balance of payment crisis, but leaves behind the same legacy for the next government.

The present government, no doubt, has succeeded in turning huge current account deficit into surplus, but it was largely done by bringing down imports.

The Covid-19 pandemic has created many challenges for the government, but it has brought many benefits for it too.

Pakistan is lucky that the pandemic has not hit the country as badly as its neighbours, which provided it with opportunities that other countries missed out.

Pakistan has seen a considerable increase in textile exports during the pandemic as Bangladesh and India failed to entertain the international orders because of the pandemic.

Similarly, the inflow of foreign remittances has been quite encouraging, as many land routes for illegal money transfers were choked because of the Covid-19 situation and Pakistan’s tough crackdown on money laundering because of tough FATF monitoring, which was also a major factor in this regard. But the true impact of these two factors which helped increase country’s foreign currency reserves could be gauged only once the pandemic subsidises.

The government needs to address the deep-rooted economic malaise.

Cosmetic measures and short-lived gains could not be counted as real achievements. These measures could only be taken with the consensus of all stakeholders and this consensus should be manifested through a strong political will to implement these measures.

But this is only possible if the supremacy of law and constitution is ensured by all stakeholders.

Though there has been uninterrupted civilian rule in the country for over 13 years during which there have been three general elections, political stability is still largely lacking.

The first and foremost condition to ensure political stability in the country is that all stakeholders and institutions strictly abide by their constitutional role on their own. This should be followed by introduction of much-needed electoral reforms to establish credibility of elections so that losers do not cry foul after every poll, as it has been happening since 1977.

And whosoever wins elections should be given the chance to implement its manifesto and there should be no attempt by any quarter to unconstitutionally interrupt its tenure.

These measures would create the much-desired political stability and also pave the way for the economic progress of the country.

If we fail to achieve this objective, the façade of a civilian rule and regular holding of general elections would not bring in political stability and the economic development too would stay as elusive as ever.

We need to learn lessons from the countries that gained independence much later than us, but through timely actions they were able to achieve political stability and then ultimately economic progress.

Bangladesh is the most relevant example for Pakistan in this regard, as we have shared over two decades of history with them and have experienced same problems after independence.

After experiencing coups and mutinies for over three decades, they decided to follow their constitution which helped them emerge as a growing economy in the region.

A country that was notorious world over for its grinding poverty, deaths and destructions caused by natural disasters and political turmoil is now being predicted to be joining the league of developed nations in a decade or so.

Successive governments in Pakistan have failed to fully concentrate on addressing the profound economic problems faced by the country as throughout their stint in power they devote much of their time in handling political challenges to save their rule.

The present government has still two years to go to complete its tenure, but doubts are being cast whether it would be able to complete its tenure. And even if does so can it provide an effective governance or work as a lame-duck government?

It is, therefore, vital for all stakeholders to put their heads together to find a way to break the perpetual cycle of uncertainty and put the country onto a genuine path of progress and development.

The writer is a senior journalist based in Islamabad