The Pakistan Tehreek-e-Insaf (PTI) government has unveiled a Rs7.13 trillion budget for the upcoming fiscal year, which was presented before the parliament by Industries Minister Hammad Azhar amid opposition members’ protest against the same for being “anti-people”.
But while the budget, which Prime Minister (PM) Imran Khan’s team claims will bring relief to the masses in coronavirus times, is drawing mixed reactions from political leaders and the general public, what do economists have to say about it?
“Given the GDP [gross domestic product] projections (2.1%) for next year, it is apparent that the government has failed to provide impetus to the economy. This has highlighted resource constraints the current government is facing. The government is basically relying on the stimulus of 1.2 trillion it provided during COVID-19 and is now consolidating its finances due to [the] IMF [International Monetary Fund] programme.”
“Budget making has been reduced to a meaningless annual ritual given the overall dismal performance in meeting the targets, a performance which had little to do with the pandemic. Given that Pakistan’s economy is contracting for the first time in history, I had hoped that the government will come up with a plan to revive growth. A big near term risk to growth is the locust attack. I don’t see anything in the budget to help the agriculture sector face this threat. On a broader note, the government seems lost and overwhelmed by the economic contraction. I don’t see how it succeed in meeting the revenue target through privatisation when the business confidence is so low and the premier appears to be, honestly, clueless about we need to do to reform the economy, reset spending priorities and revive confidence in the government.”
“It is an unrealistic budget that is based on an unrealistic tax collection target. The budget should have included a bold plan to cut losses in public sector companies and an equally bold plan for tackling losses in the energy sector. Pakistan additionally needs an emergency plan to raise agricultural productivity as agriculture is the only sector of the economy that has recorded some growth. Such big moves require a national political consensus which is missing as the premier refuses to talk to other mainstream political leaders.”
According to Hammad Azhar, the Federal Board of Revenue (FBR) revenue target for next year has been kept at Rs4.95 trillion, while defence allocations amount to around Rs1.3 trillion.
The federal development programme has been budgeted at Rs650 billion to support growth prospects.
The budget for fiscal year (FY) 2020-21 comes at a time when the country is battling the COVID-19 pandemic that has served a severe blow to the economy. According to reports, it has been formulated considering the impact of the virus and to give relief to the citizens, as part of which no new taxes have been imposed.
Check out the budget document here.