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Monday, April 15, 2024

Pakistan’s economy and supplementary budget

Pakistan faces mounting economic challenges, including a growing fiscal deficit, declining foreign exchange reserves, and high inflation. The IMF had earlier suspended its $6.5 billion program with Pakistan in 2022, citing the government's failure to meet key reform targets.

After the failure to sign MoU with IMF, Government has decided to meet the conditions of the IMF before meeting them. Finance Minister Ishaq Dar on Wednesday tabled Finance (Supplementary) Bill 2023 dubbed as “mini-budget” in the National Assembly and Senate in order to meet the conditions set by the International Monetary Fund (IMF) for the revival of the derailed $6.5 billion program after President Arif Alvi refused to promulgate an ordinance sent by the government.

Clearly, the purpose of the supplementary bill is to raise the tax collection desired by IMF. Although there was an option to take measures that may affect the elite, like reducing the size of the cabinet, cutting the perks and privileges of the elite, reducing the government expenditures in daily life, etc. But, the Government has contrarily increased the size of the cabinet and imported more luxury cars, etc.

Read more: Nation expresses upset over Fitch downgrading Pakistan’s rating to CCC-

Unnecessary foreign visits

The government has taken measures affecting the public, like an increase in GST, a hike in petrol price, electricity price, gas price, etc., which is a direct burden on the common man. Price hikes and inflation may harm the public and push more people to live under the poverty line.

The government through the supplementary bill has proposed to raise the goods and services tax to 18% from 17% as part of efforts to raise 170 billion rupees ($639 million) in extra revenue during the current fiscal year ending July.

Pakistan faces mounting economic challenges, including a growing fiscal deficit, declining foreign exchange reserves, and high inflation. The IMF had earlier suspended its $6.5 billion program with Pakistan in 2022, citing the government’s failure to meet key reform targets.

The tabling of the “mini-budget” is a crucial step towards meeting the conditions set by the IMF for the resumption of the program. However, it remains to be seen if the government can implement the necessary economic reforms to revive the country’s economy and secure the IMF’s support.

Dar asked the masses to adopt a “simple way of life”. But, the elite is an exception and was not implementing his advice.

It is desired that a commission should be formed on the economic lapses in the country so that the core reason for the economic failure is ascertained, and the circular debt had reached a “destructive” level in the country. The damage caused to the national economy is severe and reached an irreversible stage. The destiny of the nation is very much visible, yet, appropriate measures are not visible by the Government. Pity!

The finance minister said that Prime Minister Shehbaz Sharif will soon take the nation into confidence on the Finance Supplementary Bill, adding that the cabinet would soon give the plan to reduce the government expenditures. The public is waiting for it as we have not seen any measures to affect the elite. We are optimistic and eagerly waiting for such an announcement.

Read more: Pakistan to move towards coal-based power generation

The way forward

It is very much appreciated that Prime Minister Shabazz Sharif has praised Pakistani-origin businessmen for generous donations for earthquake victims in Turkey and Syria. “Deeply moved by the example of an anonymous Pakistani who walked into Turkish embassy in the US and donated $30m for earthquake victims in Turkiye and Syria,” Prime Minister of Pakistan Shehbaz Sharif tweeted. “These are such glorious acts of philanthropy that enable humanity to triumph over the seemingly insurmountable odds,” he added.

This is the true spirit of Islam, and Pakistan is full of such philanthropists. If the ruling elite initiates similar practices by donating their personal wealth to rescue Pakistan’s ailing economy, many other businessmen will follow them. Trust, we can collect enough funds so that we may not need IMF. However, the cost of IMF loans must be evaluated in all respect, especially in terms of national integrity, sovereignty, and security. For some meager cash, we should not blindly accept all conditions.

All institutions and state pillars must be consulted and the public should be taken into confidence too. The hidden terms and conditions must be publicized and discussed among all stakeholders and National Assembly and Senate. IMF agenda and consequences of agreements must be shared with the public for ownership. May Allah protect this nation and the land of pure people – Pakistan!


Author: Prof. Engr. Zamir Ahmed Awan, Founding Chair GSRRA, Sinologist (ex-Diplomat), Editor, Analyst, and Non-Resident Fellow of CCG (Center for China and Globalization). (E-mail: awanzamir@yahoo.com). 

The views expressed in the article are the author’s own and do not necessarily reflect the editorial policy of Global Village Space.