As the government led by Shehbaz Sharif continues to refine the upcoming budget, it may be premature to make assumptions about its contents. It will take a few more days for the budget ideas to become more solid and for their contents to be finalized.
But one thing is certain: the government is facing one of its hardest challenges in trying to strike a balance between its political imperatives (supporting households that can no longer afford the crippling inflation) and the need to close a significant budgetary hole in the economy. The PML-N conference, which was presided over by party leader Nawaz Sharif and attended by the prime minister, opted to draft a “people-friendly” budget while following IMF guidelines on Wednesday, further highlighting the party leadership’s perplexity over how to handle this conundrum. Unsurprisingly, neither the PML-N nor the federal government released an official statement regarding the outcome of the talks. Nonetheless, it is quite evident that the prime minister is in a difficult situation since he is torn between the demands of the IMF and the public. The PML-N’s uncertainty about the budget’s format is indicative of the unstable political climate in the nation. The ruling party has to balance its desire to obtain international funding—which is essential for boosting the economy—with its reluctance to forfeit further political capital by enforcing strict conditions from the IMF.
Simultaneously, PML-N chief Nawaz Sharif, who returned to office a few days ago after a six-year absence due to his disqualification, requires something concrete on the economic front to not only counter the narrative of his arch-rival Imran Khan in Punjab but also to hold onto the public support that he currently enjoys. His group has already experienced hardship. which, in addition to industry closures and job losses, had monthly inflation soar to 38 percent and interest rates rise to a record high of 22 percent.
Therefore, it is reasonable to predict that the PML-N will make every effort to fulfill the macroeconomic benchmarks set by the IMF at the federal level while implementing populist policies in the Punjab budget in an effort to revitalize the province’s party network.
In defiance of precedent, the PTI government in KP unveiled its upcoming budget last Thursday, considerably ahead of the federal budget. has already demonstrated to other provinces how they may use their own budgetary resources to carry out the party’s programs and satisfy their voters while adhering to the IMF’s requirements. The chances of other parties resisting this temptation are slim.