Few prospects on the income side
Since his disqualification Nawaz Sharif has expressed concern over the fledgling condition of the economy insinuating that everything was hunky dory during the four years he was the Prime Minister and the sudden deterioration is the result of his ouster.
His disgraced former Finance Minister Ishaq Dar also always painted a very rosy picture of our economic health while the reality was much different. As things stand we in quite a bit of mess that from the looks of it is only going to get worse.
Similar to the previous year the government is yet again all set to miss the budget deficit target as only within the five months of the current fiscal year it stands at a whopping Rs826 billion that translates into 2.3% of Gross Domestic Product (GDP) and more than half of the annual target.
Debt servicing happens to be the biggest contributor to the deficit. The warning signs were all there when the PML-N recklessly kept piling on debt without much of a plan as to how it would manage repayments plus interest. It is election year and the government will pull out all the stops to splurge on high visibility infrastructure projects causing expenditures to go up.
Then there is the widening current account deficit currently at an alarming level of 89% or $6.64 billion. Some measures have been taken in this regard like increasing regulatory duties by up to 350% on luxury items and rapidly devaluating the rupee but these moves are stop gap and likely to be inflationary.
The US restricting any and all aid until we meet their demands is also a setback as it removes that soft red white and blue cushion provided on the income side to support the budget at regular intervals. Four years were wasted ignoring warnings from experts and international donors like the IMF about our deteriorating economic health.
Whoever wins the next elections, they are going to inherit an economic mess. Will they repeat the same mistakes or take the tough decisions needed to fix the problems only time will tell.