Questions left unanswered

ISLAMABAD:

The federal government will spend Rs4.45 trillion in 2015-16.

The two most relevant questions that occur: where will this amount be spent and where will this money come from?

Answer these two questions prudently and you know the truth of all the previous budgets including this one.

True, the government needs money to run its institutions with three goals to meet: finance the institutions; finance the development; and finance the ruling class over the new fiscal year.

Institutions are supposed to be financed in a manner that goals set for their performances are met without want of additional (extra-budgetary) money. Development is supposed to be financed for ensuring growth-support through better infrastructure.

And the ruling class—be it in power or in the opposition; in politics or in civil-military bureaucracy—is supposed to be financed through the ‘cuts’ they can have from the allocations to institutional and development-financing.

The above brief kept in mind; one should read the budget without getting entangled in the fiscal complexities. The Rs4.45 trillion budget allows Rs700 billion for the federal development programmes and Rs814 billion for the provincial-development assistance—a total of Rs1.53 trillion. The rest of Rs2.8 trillion (which is about twice the amount of the development-budget) will go to institutional financing.

With these figures in view, one can ask the most prudent questions about this budget and all the previous ones. Should a developing country spend two-thirds of the money unearned on institutions that are mostly dormant (especially when less than a million people pay income taxes)? Why does the ruling class of Pakistan spend that much on institution-financing in a situation when the state is known for playing an under-performing, corrupt colonial master? Why does the Parliament allow it and not say a word about this tragic situation?

Let us further substantiate the method of reading the budget from a public perspective, and then look for answers to the above questions.

Pakistan has not met the targets for exports for fiscal year 2014-15. Over 90% schemes under the federal and provincial development programmes suffer from perennial delays. Yet, the government borrowed Rs4 trillion over 2013-15, as pointed out by Khurshid Shah, the leader of the opposition in his post-budget speech. If the export-production and development infrastructure did not get the money injection for timely and target-wise performance, where did this money go? Has the ruling class been over-financing itself, in neglect of the institutional and development-financing? If that is not the case, and Khurshid Shah was right in pointing out that fresh loans of Rs4 trillion were taken in 2013-15, where did most of the money from the previous budget go, leaving Pakistan in a perpetual crisis with shortages of electricity, water resources, farm-market roads, educational-health facilities, easy loans, better policing and revenue departments?

If exports fell by 3.2% in 2014-15 (from $20.89 billion in the previous year), the assistance the state institutions were supposed to offer to exports surely lacked in a massive way. If the government had to borrow so heavily, it must have either spent fabulously on something kept secret from the Parliament, or on escalation in prices allowed to the contractor class of the country. If the borrowed money went to financing the budget-deficit, the government should have come out with an explanation on the deficit. It did not. What are people of Pakistan supposed to think of this mystery?

Last year, fiscal deficit stood at 5%t and this year the budget-documents project it at 4.3%. Does it mean that the government will borrow another Rs2 trillion or more in 2015-16 to meet this mammoth deficit? If it does, what would be the cost of servicing this loan? Budget documents are quiet over the previous cost, and they would be mum over the new cost too, most probably.

Where is the Parliament and the international and national sense of transparency?

As we ask the questions about the Parliament (which has set up a committee to probe the previous loans) and transparency, a comprehensive answer can be offered to all the questions asked above. And the answer remains that this tragic trend will continue unless this state and the corrupt class that is responsible are made accountable.

THE WRITER HAS WORKED WITH MAJOR NEWSPAPERS AND SPECIALISES IN ANALYSIS OF PUBLIC FINANCE AND GEO-ECONOMICS OF TERRORISM

Published in The Express Tribune, June 15^th,  2015.

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