Some change at last

There are sufficient signs that the country’s economic managers are preparing to move out of the shadows of Ishaq Dar and the technocrats that were calling the shots before the PML-N-led government. That much is clear from the budget strategy paper. There is, however, also sufficient clarity about the expansionary nature of the fiscal policy. For instance, we know that half of the estimated budget of Rs5.237 trillion for the next fiscal year will be used up for the country’s growing defence needs and debt servicing. Some Rs2.8 trillion out of the total budget of Rs5.237 trillion — which is 10% higher than the previous year’s original budget — will be utilised on defence and debt servicing. Thus there will be too little left for development.

But there is some good news too. So far there is little or no attempt to include the Coalition Support Fund and other allocations from non-tax revenues. Subsidies and other expenses also seem to be more realistic. For the better part of the past decade, there was a tendency to inflate many budget items just to give off the impression that economic managers had devised a more balanced budget. To the credit of those in charge now we see more willingness to be credible. This must be appreciated.

Eventually what is decided by the present managers of the economy will depend on the next government and its priorities as well as the International Monetary Fund. We would advise the next government to work harder on the tax amnesty scheme and stick only to realistic figures when engaging in budget-making exercises. The policy of understating expenditures and overstating revenue especially in the time of budgets just has to go. There is no comfort in fudged figures.

Published in The Express Tribune, April 21^st, 2018.

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