- PTI’s dilemma
By the time the 2018 elections arrived it was clear to anyone who could access ww.sbp.org.pk/ that the country’s forex reserves were fast shrinking to below the danger point. Intelligent newspaper readers were aware that the country was badly indebted. There were editorial comments and columns in newspapers like ours criticising the finance minister’s policy of keeping the rupee overvalued. The economists who were critical of the PMLN’s policies were writing articles on government’s failure to urgently selloff the major loss making public sector enterprises. Others castigated its failure to broaden the tax net for fear of annoying powerful lobbies.
The PTI however boasted of a team of highly knowledgeable economic experts who had avowedly prepared policies to turn the economy around despite all these problems. The party promised everyone a pie the sky like 10 million jobs for the unemployed and five million housing units for the poor. Two months before the elections the party announced a slew of pledges that included Fata’s expeditious merger with KP, bifurcation of Punjab province, a development package for Karachi and a programme for alleviation of poverty besides a number of steps for improvement of the economy. All these projects require mega bucks.
The Federal Finance Secretary told the NFC moot on Wednesday that in the current fiscal year the government would pay Rs3.6 trillion on account of debt servicing and defence spending that is equal to 68.2pc of the current fiscal year’s revised budget. The two expenditures however are equal to 121pc of the net federal revenues. The finance ministry has to borrow to pay salaries, pensions, run hospitals, schools and build roads. Every penny that the centre spends on development is borrowed either from the banks or foreign sources.
The cabinet has now vowed to increase the defence budget. The only way it can satisfy both the voters and the army is by raising taxes in a big way, drastically improving exports and selling off major loss making public enterprises. Alternately it will have to go begging for more loans. In any case it is going to be a tight rope walk. Wining the elections was easy, governing the country is much more difficult.
