What’s needed: selflessness or self-preservation?

The one area in which performance of Pakistani media has arguably not been too great is reporting on economic and business matters. One reason is the media’s near-total focus on political issues. Media organisations, in general, are so engaged in ‘ball-to-ball commentary’ of even the minutest of political matters that they often fail to give due importance to even major economic issues.

Then there is the issue of communicating to the masses complicated economic concepts in easy-to-understand terms. Most economic reporters have never been trained by their organisations in this area — in any area for that matter. People join the profession in a haphazard manner and on-the-job training is almost non-existent. Some journalists do manage to excel thanks to their hard work, but the quality of economic reporting has hardly improved in the last three decades or so. As a result, it’s quite comprehensible why a member of the public, who regularly watches television and/or reads newspapers, may not be fully aware of the horrors of Pakistani economy today.

One would also argue that obsession with politics and relegation of economic issues to the tier of less important subjects have sort of impaired the ability of editors to properly decide which of the economic stories to play up and which to play down. I mean what’s the wisdom in splashing reports about a protest across the front pages of newspapers whose sole aim is to thwart the government’s efforts to document the economy or avoid paying taxes!

A related issue may be the editors’ liking of certain governments and hatred of others. Every editor should realise that during times of crises, extreme caution should be exercised regarding handling of issues. The current economic and financial crises are no different.

It follows then that all the editors who are playing up criticism of even the badly needed policy measures today — like attempts to improve tax revenues substantially, just because they don’t support the current dispensation — are actually doing a disservice to the masses as they are misleading them in the process. Constant efforts on their part to safeguard the interests of the salaried class smack of a deep desire to grant undue favours to their own kind. Acting as advocates and judges in their own cause does not seem nice. After all, they should speak up about the entire nation, not just one group of people.

Some of you may well ask here: why is all this important? Well, it’s important because the size of the country’s budget has more than doubled in a space of just five years! The total outlay was only Rs7.03 trillion in the 2019-20 budget, which actually doubled last year (reaching Rs14.46tr). This year it has zoomed past that figure, to a whopping Rs18.87 trillion.

Why should we be overly concerned about a sharp increase in the budget outlay? Doesn’t an increase in budget size represent a rapidly growing pie? Well, the answer lies in finding out what’s causing the sharp increase. If a positive factor (like a substantial hike in revenue) is fuelling the size of our budget, then every Pakistani should be dancing in the streets. But if a negative factor (such as an unusually sharp increase in an expense account) is responsible, then appropriate corrective measures should be prescribed.

In order to get to the bottom of the matter, one carried out some research and found out that skyrocketing interest payments are causing the sharp increase in budget size.

Fiscal Year	Budget Outlay (in trillions)	Debt Servicing/Interest Payments (in trillions)
2019-20	Rs7.03	Rs2.89
2022-23	Rs9.50	Rs3.95
2023-24	Rs14.46	Rs7.3
2024-25	Rs18.87	Rs9.77

In FY2019-20 the amount needed for interest payments was only 41 per cent of the total outlay, but now it’s substantially greater than half of total expenditure.

The total amount allocated for debt servicing, which stood at Rs2.89 trillion in FY2019-20, has shot up to Rs9.77 trillion in the current budget. Surely, a whopping increase of more than 300 per cent in any expense account within a period of five years is a deeply troubling matter, especially if no substantial change is on the horizon. One fears that the amount needed for servicing debt in coming years will simply be too large to handle.

What’s happening is that each year we borrow both from national and international sources to meet our total outlay, which in turn causes a sharp hike in debt servicing in the following years. When the total expenditure rises sharply on the back of this hike in debt servicing, we have to raise more revenues just to keep pace with our total expenses. Thus, a vicious cycle has been created, which has brought the Pakistani nation to the brink of disaster.

What to do then? Well, ideally we should stop borrowing money. If that’s not possible immediately, then steps should be taken to retire a substantial portion from our total debt. Otherwise, the expenditure side of our federal budget will begin playing havoc with our economy within the next few years.

If a Mahathir would be facing these problems he would have gone into an overdrive at least a couple of years ago, explaining the tough situation to the public clearly and calling for belt-tightening measures and sacrifices across all major sectors. I don’t think he would have wasted a single minute before announcing austerity measures for the government sector and privatising state-owned organisations that are turning in losses by the billions.

If carried out in a proper manner, privatisation of loss-making companies will reduce the government’s footprint; there will be a decrease in the government’s expenditure; and the nation will get some “cash in hand”. The proceeds from privatisation can then be utilised to retire some debt, which in turn will result in some relief on the debt servicing front. The other area where some “brave” steps need to be taken is expanding the tax net.

To be sure, many economists and journalists already know about the situation described above. The fact, however, remains that members of the public are largely in the dark about the true nature of the crises the nation faces. Journalists would do well to explain the existing precarious situation to them properly, and fast.