While several measures taken in the federal budget 2019-20 are raising fears in nearly all sectors of economy and various segments of society, it may well pay good dividends in the longer run through measures taken for enhanced fiscal discipline and meaningful economic management.
It was however essential to develop a national consensus through effective communication strategy to see off the difficult times, a need that has been sorely overlooked by the people at the helm of affairs.
This message emerged from a roundtable session on Federal Budget 2019-20 at the Institute of Policy Studies (IPS), Islamabad.
The session was addressed by Dr Waqar Masood Khan, former secretary finance, Zafarul Hasan Almas, chief macroeconomics, Planning Commission of Pakistan, Dr Pervez Tahir, former chief economist, Zaheeruddin Dar, economic policy analyst, Dr Aneel Salman, HoD, Management Sciences, COMSATS University and Mubarak Zeb Khan journalist.
Dr Masood indicated some silver linings in the presented budget stating that it could improve fiscal and economic management if handled wisely, a need that was severely lacking in the past three fiscal years of 2015-16, 2017-18 and even 2018-19 – the initial incumbency period of the new government.
He however questioned the rationale behind opting for the IMF programme so late.
He said that the pinpoint target of IMF was to fix the primary deficit, which is the need of the time for the country’s economic policy. He also praised some steps being taken in the budget including ban on government borrowing from the State Bank of Pakistan, this however should be coupled with improving the governance instead of trying to fix the public service institutions, he viewed.
He also viewed IMF’s review of the economic targets on quarterly basis for the next three years as a good omen for economic discipline.
He urged on the need of developing a national consensus on the economic challenges with an effective communication strategy, which he found nearly non-existent in the government’s policy so far.
Almas said that the recent budget was made in the most difficult environment the country was ever faced with as it was against the unprecedented challenges of macroeconomic instability, growth slowdown, high inflation, decline in private investment, issue of fiscal adjustments, debt issues, trade imbalance, and high losses incurred by public sector enterprises.
Dr Salman was of the view that implicit obligations were missing in the budget as no long-term objectives were being seen. He said that the country’s economy has always been unstable, unsustainable, unfair and unpredictable, a state that can only be improved by good governance. He said that there was considerable policy research work done by the country’s academia and it was the government’s responsibility to take advantage from it.
Zeb opined that political economy was at the centre of all problems, stressing that the expenditures done in the name of PSDP should be monitored. He was however able to see a positive side stating that the pressures brought forth by IMF and FATF may pave way for some kind of improvement in the affairs. Legislations such as the ‘Baynami Act’ are a positive sign, he remarked.
Dar was critical of the proposed federal budget and questioned if the budget was made to increase the growth or to escalate poverty. He said that the interest rate which was set this year would not attract any business investment.
Published in The Express Tribune, June 15th, 2019.