- Meeting targets unlikely
The federal budget has been duly presented, but the person really responsible for it, PM’s Finance Adviser Dr Hafeez Sheikh, only had his moment in the sun at Saturday’s traditional post-Budget press conference, the actual presentation to the National Assembly having been made by the Industries and Production Minister, who is a member of that House, which the PM’s Advisor is not. Dr Shaikh may have found it difficult to prepare a Budget where the all-important revenue target is dictated by the International Monetary Fund. The targets given for the revenue collection usually determine provincial budgets, but Dr Shaikh’s confidence in is own figures were so low that he said the provinces were free to base their budgets on their own projections of what the Federal Bureau of Revenue would collect.
This inability to judge the reliability of government revenue does not inspire much confidence in the FBR’s ability to collect the Rs 4.9 trillion committed to the IMF. As Dr Shaikh said, the Budget came at a peculiar time, in the midst of the covid-19 pandemic, and all bets could be off if the pandemic lasted. Any failure to meet the collection would not only throw provincial budgets out of kilter, but would also provide the IMF an excuse to pull out of its current Extended Funding Facility. That would not be the only obligation that Pakistan might not be able to meet. Even though there has been some temporary debt relief given, Pakistan is by no means safe from a foreign debt repayment crisis which is brewing, and which will be made worse by the collapse of both export earnings and workers’ remittances.
Dr Shaikh came very close to saying that the Budget was only presented because it was a constitutional requirement. It certainly seemed that way, mainly because it was unable to dispel the uncertainty surrounding government finances that it was supposed to. This could be because of the covid-19 pandemic, but its devastating effects should have been factored in. With Dr Sheikh heading the government’s economic team, it’s not as if the expertise is lacking to foresee at least the range within which the government can operate. There has to be an element of realism introduced into government finances, an element which at the moment seems lacking.
