- IMF’s direction a wake-up call
One of the PTI’s first measures, after coming to power, was to restrict the ballooning budget deficit, significantly cutting the Public Sector Development Programme (PSDP) by Rs125 billion. A second cut for Rs100 billion was made earlier this year. A similar cut is now being hinted at to bridge the tax shortfall in order to meet an IMF condition of restricting the primary budget deficit to Rs102 billion. The same IMF, whose team is visiting Pakistan for its first quarterly review of the current 3-year programme, after meeting with provincial and federal economic managers, has “stressed upon the full use of the development budget to achieve the development goals”. Earlier, the State Bank of Pakistan, in its annual report, stated that GDP growth was linked to development spending and both moved in the same direction, going on to say the former would remain subdued during the next fiscal year. Given the precarious situation on the revenue side, the government is keeping the option of further cuts to the budget on the table but nothing is stopping them from utilizing the funds that have already been allocated. Funds that have been released but not used, highlight the inefficiency of government both at the federal and provincial levels. Pakistan’s growth rate is expected to remain the lowest in the region in the short to medium term at 2.4 percent. The economic slowdown has resulted in joblessness and as inflation continues to persist the effects of unemployment are being amplified, hitting the common man the hardest.
Using approved and allocated development funds is therefore necessary if the government wants to provide the relief to the citizenry that it had promised. Not only will it help stimulate growth in the economy but jobs will also be created. It is a long and tiring road to economic recovery but it will not be automatic; IMF’s recommendation of full utilization of development funds should therefore act as a wake-up call to the government that it needs to do all it can with the resources available to achieve economic betterment.
