Experts term projections ‘fluid’
Photo: file
The figures given in the federal budget for fiscal year 2022-23 are extremely fluid and will not remain the same in the final document that will be approved by parliament at the end of current month, said experts at a seminar.
Current political instability, which is coinciding with economic instability, has created a critical situation which requires efficient budget planning and approval, they stressed.
The experts made the observations at a hybrid seminar titled “The federal budget 2022-23: a review”, organised by the Institute of Policy Studies to evaluate the budget measures and the economic direction through the policy lens.
Speaking at the event, former Planning Commission chief economist Dr Pervaiz Tahir was of the view that the present budget indicated no seriousness and philosophy behind its preparation.
He noted that despite setting growth targets, Pakistan was not moving towards growth because of the inherent challenges and limitations in its economic structure. “Many problems and challenges will continue to exist for some time before actual growth is visible,” he remarked.
Tahir pointed out certain challenges including the low long-term investment rate and the growth target.
Confronting the criticism made against the low growth of 5%, he stated that a growth rate beyond 6% could create crisis for Pakistan.
Talking about the role of the International Monetary Fund (IMF) in budget planning, the former chief economist emphasised that Pakistan would have been in a different position had it done planning without the intervention and role of the IMF.
Centre for International Entrepreneurship and Trade Founder Zaheeruddin Dar cautioned that it was too early to visualise the effect and outcome of the budget as the figures were expected to change and the real picture would emerge at the end of current fiscal year on June 30 with the close of accounts.
He claimed that Pakistan was already going through a state of default in terms of balance of payments, but had not announced it.
“This is because by doing so, it is the elite class that would have to pay the price, while in the current scenario it is the poor who is paying the price.”
Sharing his insights on tax evasion, Dar elaborated how the collection was increasing every year while at the same time tax-to-GDP (gross domestic product) ratio was declining.
He was of the view that the capacity to pay taxes was decreasing every year, resulting in a continuous increase in tax rates, decrease in the tax-to-GDP ratio and reduced economic activity.
He also highlighted the ignorance of politicians and policymakers about the important issue.
Dar said that Pakistan was facing several challenges due to the Ukraine conflict and to meet those challenges the country must invest in its economy timely to improve productivity.
Former National Tariff Commission chairman Abbas Raza was of the view that the budget presented a bleak state of the economy faced with trade deficit on the one hand and an unmanageable foreign and domestic debt on the other.
Pointing to the silence of the budget on various issues, he highlighted the government’s failure to propose effective policies and measures for debt retirement, domestic revenue mobilisation, industrial revival and controlling petroleum prices as well as inflation.
Quoting the observation made by late finance minister Dr Mahbubul Haq regarding black money, Raza elaborated how corruption and tax evasion led to further economic challenges including an unmanageable fiscal debt, devaluation of the rupee, trade and current account deficits, and compliance with the IMF and World Bank conditions.
Former finance secretary Dr Waqar Masood contended that the budget failed to address people’s grievances and gain public trust. He expressed concern over the trade deficit, revenue generation, tax-to-GDP ratio and expenditures of the government.
Evaluating the breakdown of budget figures, he emphasised that no option was left for any productive investment to make the economy stronger.
Islamic Economics Project Director Dr Salman Ahmed Shaikh was more concerned about the low proportion of budget for the Public Sector Development Programme and social protection.
He observed that the budget for every public sector development area like health, science and education had been reduced.
Published in The Express Tribune, June 19th, 2022.
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