Between fact and fiction
On the surface, at least, there was little different about this budget than previous ones. It was difficult to tell, for example, that this was the sitting government’s third budget. In fact, it seems destined to follow the previous year’s example by missing crucial targets. GDP growth at 5.5 percent, especially, seems just as unrealistic as last year’s target of 5.1 percent. Since all that has been achieved, provisionally, is 4.2 percent, perhaps a sense of realism could have been introduced this year. The government really didn’t inspire enough confidence to justify expectations of a 3.5 percent expansion in estimates.
No doubt Dar sb is looking to leverage the expansionary fiscal and monetary environment to trigger growth. There is a deck of infrastructure projects – like motorways, power plants, etc – on the table. And the interest rate regime is the most relaxed in almost half a century. Theoretically such stimuli should suffice to improve investment, local and foreign, though only in isolation. Add the energy and security situation and the transmission mechanism seems suspect. That explains, among other things, why Pakistanis are themselves investing abroad when the government is trying to sell the business environment at home.
The finance minister’s background and experience in the cold and unforgiving field of accounts – numbers don’t lie – makes it difficult to understand his disregard for some crucial data. Simply put, the economy will grow when the deficit is controlled and revenue raised. That, in turn, means improving tax collection, export earnings, agriculture production and manufacturing. Till these essentials are taken care of, all that can be achieved is stability, which is a world removed from growth. And it’s no good attributing resources and expecting growth figures that are continuously revised downwards and missed. When these numbers and their trends are observed, it becomes impossible to agree with the words Dar sb began his budget speech with: “The economic performance we have rendered in two years is unparalleled in the history of democratic governments”. It is little surprise, in hindsight, that much that followed was just as much a work of fiction.