Suggestions and vetoes

Is there any point in making pre-budget proposals?

How long are the pre-budget proposals, which are meant to influence decision-making, going to be directed at the government by the various trade bodies, when it can no longer make decisions, but has to get approval for everything from the International Monetary Fund? The government should keep in mind that the proposals are made by the executives of the trade bodies to satisfy their constituencies, not as any academic exercise, and it is only the willingness of the government, and reluctance of the IMF, to receive their proposals that keep the proposals submitted to the government.

An example of how the wishes of a business association can run counter to that of the IMF came with the Pakistan Business Council’s recommendation that customs duty cuts should not be abrupt. This runs directly at the heart of the IMF’s desire that they be abolished in one go. The Council also asked for proper supply of electricity, and at a lower rate than at present. That was also one of the demands of the Pakistan International Business Forum. Both organizations also recommended continuity of policy. Actually, if the government could establish that that continuity would not be broken, they would remove one of the main grievances of the business community.

Meanwhile, though, the government has to engage in a round of pre-budget talks with the IMF, starting Wednesday. The government is not off the hook yet, but can see light at the end of the tunnel. This is not the last budget under the current programme the government must submit for approval, as next year’s will fall just before the current programme expires next September. At the beginning of the programme, Prime Minister Shehbaz Sharif was emphatic that this would be the last IMF programme, but now he is silent on the subject, lending credence to the whispers that that will be another programme. There has been some mention of an extension to the present one. It is almost as if the Finance Ministry hopes that more of the same prescription will get Pakistan out of its foreign exchange difficulties. The alternative, that the IMF has got its economics wrong, is too horrible to contemplate. It would mean that the sacrifices that the whole nation has made have been in vain. That should have been obvious from how the programme lacked a component that would lead to great exports.