Friday May 24, 2024

National budget -- budgeted out of loans

By Senator Rehman Malik
May 11, 2018

I have been witnessing and speaking on budget every year for last eleven budgets as member of the Senate. It is discussed, analysed and criticised and suggestions and proposals are given to the government but hardly any recommendations by the parliamentarian are heard and ever accepted.

Where is the money from government exchequer, which is becoming the basis of this budget? There is 100 USD billion plus CPEC $63 billion external debt; internal debt is Rs19 trillion; import (591741 PKR million) is more than double of export (250065 PKR million); but the total budget of 2018-19 is worth of Rs5932.5 billion. In fact this budget is based on money borrowed from banks and external donors. Allow me to say that this time our budget is totally on borrowed money.

Our important national assets like Jinnah International Airport Karachi, Peshawar-Faisalabad motorway, Faisalabad-Pindi Bhattian motorway, Islamabad-Peshawar motorway, Islamabad-Lahore motorway, buildings of PTV and Radio Pakistan have all been mortgaged to the external financial institutes like World Bank, IMF and others so in fact today’s budget being presented makes my head down of shame that we are presenting budget relying upon borrowed money. Interestingly, the budget was presented by an un-elected person who was appointed as Minister for Finance hours before the budget so we must call him as “Mr. Budget Minister”. I feel sorry for this hurriedly crowned minister who came to read out the budget, which was prepared by FBR. We may call an auto prepared budget by some fillings the blanks as per the directions of IMF and World Bank who are our ultimate budget fixers.

Let me mention it here that I am not criticising this government alone for the external and internal debts but all previous governments since 1952 are responsible for it as those had been running their economic affairs/policies on borrowed money. It is unfortunate that none of all those governments had ever presented doable retiring plan for external debts and same is repeated this year too.

The fiscal deficit of this year will be Rs2.2 trillion, inflation rate is 5.5%, and GDP annual growth rate is 5.28. Economic parameters coupled with above three points will bring following adverse effects:

1. Hike in prices because of inflation.

2. Hike in prices because of ever sliding PKR.

3. 30% levy on petroleum products.

4. Debt services for 89 USD billion external debts.

5. And a huge amount for debt service for internal debt.

Mr. Budget Minister!

How will you justify that it is people friendly budget? No, it is anti-poor people budget by which government has burdened the public with excess tax and loans. I do remember that budget was something like Eid for the people of Pakistan who used to look forward for it eagerly that it always bring relief to their lives but this budget has smashed their hopes and the government employees are crying over the lowest increase in their salaries.

Like preceding years, the government continued with budget deficit and there is not much a relief for common man. Rs1.36 trillion is allocated for interest payments on foreign loans and staggering amount of Rs920.2 billion on defence i.e. armed forces, which means out of Rs4.8 trillions, nearly half of the amount is being invested in areas which are least important for the welfare of common man.

The allocation of Rs1.001 trillion for federal government spending could have satisfied the interests of common man, but as expected, approximately half of the amount is devoted to development of transportation and construction sector, which no wonder this government has done by building new roads.

Education and health once again lack behind and are allocated only Rs35 billion and Rs48 billions, respectively, due to which the cost of health services went up about by 10% in November 2017 whereas education cost increased by 12.4%.

The budget introduced a visible hike in the prices of basic eatables and some dairy products by imposing regulatory duties on them. The eatable items on which regulatory duty got increased include curd (15pc); grated or powdered cheese of all kinds, processed cheese (from 20pc to 40pc), fresh grapes, watermelons, apricots and peaches has been raised from 20pc to 40pc. The duty on wheat and other types of wheat was increased to 60pc from 25pc. The regulatory duty on potatoes, vegetables and mixtures of vegetables rose to 50pc from 20pc. The government has burdened the masses by increasing the indirect taxes to 14% (by making an increase of PKR355 billion as compared to Budget 2016-17 i.e. from PKR2.06 trillion (34% of net total revenue) to PKR2.42 trillion (37% of net total revenue). Resultantly, the proportion of direct taxation has gone down from 25.9% to 24.6%). Not only this, but there has been a back to back increase in prices of petroleum products as according to the most recent increase, prices of petrol up from Rs1.70 to Rs87.70 per liter, diesel up from Rs2.31 to Rs98.76 a liter, kerosene oil up from Rs3.41 to Rs79.87 per litre, and light diesel up from Rs3.55 to Rs68.85.

There has been an extremely insufficient allocation of budget of only Rs26.9 billion for Fata keeping in view the vast population and the level of backwardness in the region. Thousands of tribesmen were displaced from their areas and their houses and other properties were damaged, but they have not been compensated. No concrete policies have been designed for IDPs and infrastructure rehabilitation. There is a need of at least 100pc increase in allocations for the education sector in the tribal areas. It is strange that this government is focused on extracting money from the pockets of poor people of Pakistan instead of offering them any relief. Minimum wage is meagerly fixed on 15000/- considering the inflation of daily-use items. Can Minister Budget tell us how a family of four members can manage to live even hand to mouth in this wage?

We ask as to why there is a shift increase in crime; indeed because of poor economic policies and such budget which is actually the budget of World Bank and IMF rather than budget of Pakistan.

I want to shake the corridors of power to wake up and bring some reforms for normal citizens of this country otherwise we all will be answerable and responsible for the uncertainty which will increase by each day in our country.

The writer is Chairman of think tank "global eye" & former interior minister of Pakistan.

@Email: rmalik1212@gmail .com, Twitter @Senrehmanmalik, @GlobalEye_GSA, WhatsApp +923325559393