An Optimistic Budget

As Finance Minister Ishaq Dar unveiled the budget for 2016-2017, there was disturbance in Parliament. The opposition’s furore was not about the budget, or their concerns over the figures the government is providing, but on a matter unrelated. Opposition lawmakers protested the treatment of agitating farmers who had gathered at D-Chowk in the federal capital earlier in the day. While this is indeed an issue that needed to be sorted, it still showed a distracted opposition that would not be able to successfully understand or question the budgetary allocations that will continue to impact Pakistan until the 2018 elections.

The Finance Minister claimed that the government had 'turned the economy around', something we have heard repeatedly. Whether this growth trajectory is sustainable, once the Chinese investment boost eventually plateaus, is a different matter. Additionally, the debt levels are bound to rise in the long term vis a vis China. The short term plan of the government, boosted by China, is sound, but there is no guarantee that it will cause long term indigenous growth and employment.

Of course, international observers like Standard & Poor's, Moody's and Fitch have raised their ratings for the country, signalling that there is much to gain in Pakistan for foreign investors. But local investors continue to grope in the dark, wiped out by imports and external investors.

In a nutshell, the total outlay of the budget is Rs4.75 trillion, the development expenditure for next year will be Rs1.001trillion and the defence budget has been set at Rs920.2bn. All Army officers and jawans will receive a 10 percent special allowance in lieu of their sacrifices in the war against militancy, and this will be separate from the 10pc increase in salaries for government employees and army personnel.

As usual, the government spent less than one percent of gross domestic product on the health sector during the outgoing fiscal year, ensuring that health would not be a priority in the coming year. Rs35.7bn have been allocated for Higher Education. Health programmes will receive Rs49bn and hospitals will receive Rs10bn.

Additionally, by summer 2018, nearly 10,000MW of electricity will be added to the national grid, promising to eliminate load-shedding completely – if this is true, then there is scope to predict that local investment and consumption will also rise and further the economic upturn. What must also be remembered is that inflation and growth were improved not just due to the government’s policies, that have often been exaggerated and lacklustre, but because of the global fall in oil and food prices. The international market has aided Pakistan in improving its economy, but it is up to our economic leadership to make sure enough gains are made in time for the next global economic downturn.

 

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