Prime Minister Shehbaz Sharif’s electoral coalition, desperate to seek electoral retribution after an unsuccessful office trip, wants a campaigning budget; business and industry want to see the revenue-hungry government introduce no new taxes; the general populace, grunting under the weight of economic hardship that has been present for decades now, will not be calmed without a stimulus budget; and the IMF is pushing for continued macroeconomic stabilization as well as.
Economy Minister for Sharif In order to demonstrate that he is the economic expert he is portrayed to be, Senator Ishaq Dar allegedly handed a draught finance bill that attempts to tick all these boxes, at least on paper. In other words, the government’s 2024 budget aims to be a budget for everyone. However, there are significant and perhaps unbridgeable trade-offs between these conflicting agendas. Although there is still some space for revisions because the measure is currently being debated in the National Assembly, Budget 2024’s general outline is already established, and it is abundantly evident that this budget was created with a future mini-budget in mind to incorporate its inspirational component.
The populist policies included in the budget conflict with the requirement that the government operates within its means. Additionally, the draught bill demonstrates clear evidence of a government that is unwilling to back up its claims and is willing to appease the vociferous minority at the expense of the majority’s silence. Take the 25–35% increase in federal pay and pensions, for instance. How can this be accomplished by a government whose revenue share after debt service is negative? Furthermore, the same administration is only willing to provide a meager 12.5% increase for the Benazir Income Support Program (BISP), which assists the poorest of the impoverished.
The 3.5% GDP growth target could be a giveaway of the government’s true expectations for economic growth over the upcoming fiscal year, which may be minimal or nonexistent. 3.5% GDP growth, despite the government’s projection of a 21% inflation rate, is exactly what it aims to achieve for a nation with a population growth rate of roughly 3.0%. Given the situation, a lot of the hypothetical generosity that the government can offer at the start of the fiscal year is predicated on unrealistic income projections. It is incomprehensible how it expects to accomplish the Rs9.2 trillion revenue objective considering the high inflation and low growth, particularly given how the authorities fell short of their Rs7.4 trillion income goal.
This could be a hint that the administration plans to relax import restrictions for at least the first few months of the new fiscal year in an effort to inflate the mood. As usual, the estimated import bill of $58.7 billion substantially exceeds the projected export revenue of $28 billion, demonstrating the government’s lack of confidence in its capacity to jump-start the export sector.
Above all else, the fiscal deficit projected at 6.54% is a blatant indicator that Dar and co. intend to splurge a little going into the general election scheduled for October and that they expect the new government to form after the elections to introduce a budget that tightens the belt in order to rework the numbers for a new IMF program. It is already widely known that the Fund will only tolerate a primary surplus of 0.5% and a fiscal deficit of no more than 4.0%. Overall, the draught budget fails in every area, and the populist measures that are proposed are only plainly superficial.
The needs of the impoverished are also barely taken into account. The government lacks the ability or motivation to take any effective actions in any direction, much less strong measures in the right direction that would help steer the economy out of trouble due to its obsession with the forthcoming general election.
