‘Two finance ministers spoiling the economy’

ISLAMABAD: Former finance minister Dr Hafiz A Pasha on Tuesday said the country’s financials were currently being ministered by two oppositely-thinking individuals - one in Pakistan and the other in UK -, who are not on the same page with regard to which direction to take to lead the economy out of the woods.

“One is asking for a re-negotiation of the IMF programme and the other is asking for raising petroleum products prices,” said renowned economist Dr Hafiz Pasha addressing an online seminar organised by PIDE.

“Within the dominating party, there are two views and within the coalition government, there are more political parties and we may see a flexible attitude from the IMF as they have agreed to continue Doha parleys”.

He stressed signing the Charter of Economy for moving ahead.

Pasha said the government busted the ongoing budget by Rs1,500 billion so the fiscal deficit was going to escalate.

“On current expenditures, there is a spillover of Rs1 trillion. The policy rate increased so debt servicing went up in the current fiscal year. The subsidies will go up by Rs300 billion on POL products,” Pasha said.

He said the power sector subsidies would be close to Rs600-700 billion, while the contingent liabilities grew and touched Rs2.5 trillion and adding up by Rs500 billion.

“The current expenditures spilled over by Rs1,000 billion and no one is bothered about it.” He said the budget deficit would be close to Rs5,500 billion, whereas, the primary deficit would hover around 2.6 percent of GDP for the current fiscal year.

The development expenditures, he said, would be axed by Rs300 billion for the current fiscal year.

The budget strategy paper, according to Pasha, became a wishful list as it envisaged bringing down fiscal deficit at 4 percent of GDP under three-year strategy till FY2024.

However, the budget deficit would be climbing to 9 percent of GDP for this fiscal year, he added.

Initially it projected the budget deficit down to 4.5 percent of GDP in the next fiscal year, which meant the deficit would be cut down by 50 percent in one year.

“It’s an unrealistic target,” he said and added it would be a miracle to bring the budget deficit down to 6 percent of GDP in the next budget.

The government, he said, would have to take key policy decisions to narrow the budget deficit from 9 percent to 6 percent of GDP in the next budget.

“The government will have to increase minimum tax revenues by Rs1,500 billion in the coming budget, which requires 35 percent growth,” Pasha said criticising the rebasing of national accounts and demanded thorough investigation into it.