Post-Budget Pakistan (Part 1)

These days I am in Islamabad for a short visit to discuss investment opportunities in real estate with some international investors. Since I arrived in the capital, the business and investor community has been fixated on one big, scary word i.e. Budget. I would like to discuss some of the basics surrounding this fixation.

One of Former president of the USA, Ronald Reagan’s best statements is regarding economic policy making. He said, “The government's view of the economy could be summed up in a few short phrases: if it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidise it”.

It is really amazing that we are still unable to formalise the exact parameters of when we have to tax, regulate or subsidise. And this is because we are not interested in managing our economy but instead, focused on making sure the government survives its tenure. The significance we give to national budgets has to be given to National Economic Planning, and that is practically missing in the country.

Where’s the plan?

A plan deals with a grand objective, strategy focuses on volatility in planning variables, and tactics are applied when we have a very short time to manage something highly volatile.

If we translate tactics in colloquial Urdu, it is “jugar”. It is really unfortunate that our policy makers are more interested in tactics (jugar). In the last federal budget they said that next budget shall be the budget for the poor. This year they have different excuses; it is simply because of our consistent focus on TACTICS rather than focusing toward a true economic plan.

The government is more interested in income support programmes rather than creating employment. Creating employment means crafting an attractive business environment in the country. Crafting an attractive business environment needs efficiency in procedures and regulatory system. It needs a stable law and order situation in the country. But we are unable to understand that we are in a process of accumulating cost in support of the War on Terror that can only increase, not reduce, the chaos in the country. Where we need to find political solutions of our problems, we use force that builds cost and chaos.

An Ex-American Congressman said, “If you like small governments you need to work hard at having a strong national defense that is not so militant.” The purpose of the government is to protect liberty - not to run your personal life, not to run the economy, and not to pretend that we can tell the world how they ought to live.

Today I understand what “defense that is not so militant” means. It is about using your brain, playing politics and reducing cost. If you see the USA, they are acting against this principle and bearing the cost of it. This is the same mistake that we are committing. We are just counting on the funds that we are driving in support of this war but we do not understand the social and economical cost of this war. Here, we have to review our strategy. We need to make our defense rock solid but equally smart. Otherwise, our budgets shall always be leveraged by military expenditure.

I am sure that it is not easy to cover each and everything in one piece about national economic preferences so I would like to continue my topic in the next post. I shall cover other aspects of national economic preferences in the next piece in the context of current economic statistics and how we can control the crises to achieve top economy.

Saqib Omer Saeed is a Financial/Business Researcher Analyst and adjunct faculty for Investments and Finance in CBM, SZABIST, BIZTEK & University of Karachi and blogs at www.bizomer.com