- After me, the deluge
The budget for 2018-19 is indicative of the government’s financial irresponsibility. It makes promises that cannot be fulfilled keeping in view the financial crunch the country faces. Despite opposition from political rivals as well as notable economists the government, whose tenure ends on May 31, insisted on forcing its budgetary priorities on the next government by presenting a budget for a year rather than 3-4 months.
The budget aims at pleasing large swathes of population before the elections. It offers 10 percent rise in the pay and the perks and privileges of the government servants, both civil and military, and increases by 10pc the pensions of the retired officials. It raises the threshold of tax free income to 1.2 million in one go, eroding 521,597 income tax return filers from the current tax base, which is 42pc of the existing tax base. It reduces sales tax and custom duties on several items to benefit the agriculturists and enhances funds for rural credit. It raises allocations to the social security net but fails to enhance minimum wages.
The budget allocates extra funds for the purchase of buses for Karachi’s Green Line. A Rs30 billion package has been announced for setting up a sea water treatment plant. This is to provide political space to PML-N in the metropolis. The budget pleases the army by a higher allocation to defence budget, with 19.5pc increase from last year.
SBP’s reserves have fallen to $10.9b. The FBR has failed to fulfill the targets given to it. The government has shrunk back from bringing tens of thousands of traders into the tax net. The budget makes no mention of how circular and public sector debt will be paid. Soon after the government leaves next month the country may have to knock at the IMf’s door for a balance of payments support programme and be told that austerity as the key condition, upsetting the entire budget.
The budget might win the PML-N some more votes. The next government will however have to foot the bill for the recommendations made. It will be damned if it tries to implement the recommendations and damned it doesn’t.