Budget of illusions


One of the very many promises PTI (Pakistan Tehreek e Insaf) made on the campaign trail, and indeed during much its two decades in opposition before that, was making the annual federal budget not just an efficient but also a realistic exercise. It really defeats the purpose when all ministries spend at least half the fiscal year preparing for the budget yet what is presented in the end is a collection of expenditure and revenue numbers that do not have much to do with the reality on the ground. That is why it is little surprise that hardly ever have any of our important targets been achieved. And while this year no doubt brought a lot of unexpected problems due to the coronavirus, this was not this government’s first budget. And, said as it is, it seems PTI is no different when it comes to the budget exercise. For each time it has set targets many if not all of which are simply impossible to achieve.
With a total outlay of Rs7.13 trillion including Rs3.70 trillion as revenue and a Rs3.43 trillion deficit, which is around the seven percent mark, perhaps the government should have explained just where the money to meet all its liabilities, well in excess of Rs4 trillion, is going to come from. The 4.96 trillion revenue target, also, was immediately rued out as unrealistic by everybody but the rank and file of the ruling party. Its finance team holds the coronavirus responsible for FBR’s poor performance in the fiscal just ending, but that is only half the story. All they did to improve the functioning of the board was toggle its head a few times; there was neither the structural upgradation nor the overhaul that was promised for so long; and that much becomes very clear once the numbers for the months before the virus are taken into account. To say that FBR would struggle to meet the target, then, would amount to stating the obvious, which means growth, deficit, etc, will all have to be revised down sooner rather than alter.
The budget was clearly meant to convince the IMF (International Monetary Fund) that the government will do what it has to in order to keep the Extended Fund Facility (EFF) from collapsing. That explains the extremely ambitious revenue target and the freeze on public spending, even if such policy completely contradicts with what the economy really needs. The PM himself has extended the time period before the virus peaks a good three times. And since things look sure to worsen before they can improve, what is the contingency plan if the high number of new cases forces yet another economic slowdown, or even another lockdown? This budget is full of illusions, which is why economists are already beginning to predict when a mini-budget can be expected.