Projections of the term “fluid” experts
The figures given in the federal budget for the 2022-23 fiscal year are extremely fluid and will not remain the same in the final document which will be approved by Parliament at the end of the current month, experts have said during a seminar .
The current political instability, which coincides with economic instability, has created a critical situation that requires effective budget planning and approval, they stressed.
The experts made the observations at a hybrid seminar titled “The Federal Budget 2022-23: A Stocktaking,” hosted by the Institute of Policy Studies to assess fiscal measures and economic direction through the policy lens.
Speaking at the event, the former Chief Economist of the Planning Commission, Dr. Pervaiz Tahir, said the current budget does not indicate any seriousness or philosophy behind its preparation.
He noted that despite setting growth targets, Pakistan was not moving towards growth due to challenges and limitations inherent in its economic structure. “Many issues and challenges will continue to exist for some time before real growth is visible,” he noted.
Tahir highlighted some challenges, including the low long-term investment rate and the growth target.
Confronting criticism leveled at the low 5% growth, he said a growth rate above 6% could create a crisis for Pakistan.
Talking about the role of the International Monetary Fund (IMF) in fiscal planning, the former chief economist pointed out that Pakistan would have been in a different position had it done the planning without the intervention and role of the IMF.
The founder of the Center for International Entrepreneurship and Trade, Zaheeruddin Dar, warned that it was too early to visualize the effect and outcome of the budget as the numbers had to change and the real picture would emerge at the end of the year. current year on June 30 with the closing of accounts.
He claimed that Pakistan was already going through a state of default in terms of balance of payments, but did not announce it.
“Indeed, in doing so, it is the elite class who should pay the price, whereas in the current scenario, it is the poor who pay the price.”
Sharing his thoughts on tax evasion, Dar explained how the collection was increasing every year while at the same time the ratio of taxes to GDP (gross domestic product) was decreasing.
He was of the view that the ability to pay taxes diminishes every year, which leads to a continuous increase in tax rates, a decrease in the tax-to-GDP ratio and a reduction in economic activity.
He also pointed to the ignorance of politicians and policy makers on this important issue.
Dar said Pakistan faces several challenges due to the Ukrainian conflict and to meet these challenges, the country needs to invest in its economy in a timely manner to improve productivity.
Former National Tariff Commission Chairman Abbas Raza opined that the budget presented a gloomy state of the economy facing a trade deficit on the one hand and unmanageable external and domestic debt on the other.
Highlighting the budget’s silence on various issues, he pointed to the government’s inability to come up with effective policies and measures for debt repayment, domestic revenue mobilization, industrial revival and oil price control as well as of inflation.
Citing the observation made by the late Finance Minister, Dr Mahbubul Haq, regarding black money, Raza explained how corruption and tax evasion have led to other economic challenges including unmanageable fiscal debt, the rupee devaluation, trade and current account deficits, and compliance with IMF and World Bank conditions.
Former finance secretary Dr Waqar Masood claimed the budget failed to address people’s grievances and win public trust. He expressed concern about the trade deficit, revenue generation, tax-to-GDP ratio and government spending.
Assessing the breakdown of the budget figures, he pointed out that there was no option left for any productive investment to strengthen the economy.
The director of the Islamic economics project, Dr. Salman Ahmed Shaikh, was more concerned about the low proportion of the budget for the public sector development program and social protection.
He observed that the budget for each area of public sector development such as health, science and education had been cut.
Published in The Express Tribune, June 19e2022.
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