A thread on the budget. In the current year budget deficit is claimed to be 9.1% against a target of 7.1%. This deficit is a sad record for Pakistan and one of the highest we have had. But unfortunately the final figure is going to be even higher, north of 10%. Even with covid
impact of at most of 1.5% of GDP this is way too high. This year they are now expecting only Rs 3908 bil tax revenues which is Rs 1647 or 29% below their target. On top of that the tax refund of Rs 100 being paid is not being deducted from tax revenues but being shown as a grant!
On the expenditure side, running of the civil govt was Rs 25 billion more than budgeted at Rs 445 billion. Next year they have budgeted an extra Rs 30 billion in it. So frugality we were promised is not being shown in current expenditures.
The big item in the expenditure side is of course debt service and there the number is close to Rs 3000, twice as much as we paid in PMLN’s last year. This is due to the high interest rates and also due to the historically high debt PTI incurred this year and last year.
PTI has added more than Rs 10,000 bil to our nations gross public debt in the 20 months of governance to March 20, which is about equal to what PMLN added in 5 years. Pak debt + liabilities now stand at Rs 42,820 bil from Rs 29,879 in June 18. Imran Khan has thus added more debt
in 18 months than Nawaz Sharif did in three terms as PM + the debt taken by Shahid Khaqan Abbasi as PM. Imran Khan’s debt is also more than what Mohterma Benazir Bhutto did in two terms + the debt taken by Zulfikar Ali Bhutto. And PTI was worried about our national debt!
No prime minister has had higher deficits and lower GDP growth than Imran Khan, going back to Shaheed Liaquat Ali Khan. The government had targeted bank borrowing this year of Rs 334 billion but ended up borrowing Rs 1729 billion. That’s missing the target by 418%.
The federal transfers to provinces were lower by Rs 800 bil compared to the target. This has strained the provinces and next year’s target is Rs 400 lower than last year’s target. This year our GDP is expected to shrink by 0.4% per govt and 1.5% per independent experts.
Our agri production dropped by 2.4%, including cotton by 6.9%. There is little impact of covid on agri so this is mismanagement. Large manufacturing is expected to shrink by 7.8%. Exports in PTI’s first year were $500 mil below PMLN’s last year. This year even before covid Pak
was only 2% above last year, about the same as what we did two years ago before the 40% devaluation. Now exports will be less. The govt’s target of raising FBR revenues by Rs 1050 billion is 27% more than this year’s number. This suggests a mini-budget with new taxes soon.
I was sorry to see no new initiatives in the budget to spur economic growth. With the economy shrinking, it’s important to stimulate the economy. This is not seen through more resources in the PSDP. Federal PSDP is budgeted at only Rs 650 bil, less than the budgeted amount of
Rs 700 bil last year. This is contrary to what the economy needs. Although the govt should have controlled the deficit the two years, in the next year what they need more than anything is to provide fiscal stimulus and provide jobs to peope. This is sorely missing.
Also missing is any out-of-the-box and innovate solutions for our stagnant economy. While the world is trying to come up with innovate ways to keep their economy going due to covid, this budget was not a growth budget.
