The PML-N government presented its fourth budget on June 3rd 2016. The budget contained some good features and has tried to help the agriculture sector and ailing exports related sectors. However, the budget again showed the ad-hoc policy making style of the PML-N government that has been typical of it since 1990s. It is a hurried response to two findings: i) agriculture sector is pulling Pakistan’s growth down due to lackluster performance, and ii) Pakistan’s key exports are not competitive enough. For both ailments, the government has come up with essentially single solution: reduction in costs. This engenders many questions about holistic, long-term planning and government’s ability to respond quickly to economic downturns.

First, we should think if the solutions suggested by the government are sound, sustainable solutions coming from long-term plans or temporary measures to wade through the murky waters. Do subsidies really assist the poor? International agencies such as IMF and World Bank have been advocating for reducing subsidies for more than a decade now. And there is good economic sense behind it. These subsidies are not well targeted and often the rich reap more benefits than the poor. But the issue of subsidies has never been seriously addressed due to well-known political pressures. And why zero-rating of five exports industries? Is this what makes them competitive on a sustainable basis? What about the skill levels and innovations in these industries?

Or take the example of ever-increasing reliance on withholding taxes, turnover taxes and transaction taxes. Why are income and sales taxes not properly working? Why is the tax administration not being improved? We see no strategies in the budget for setting the tax regime correct. PML-N made great promises about reforming the country in its election campaign, but we have seen little progress on real reforms. Aided by some luck through the spectacular plunge that oil prices have experienced, the government has been able to somewhat manage the public finances. But while basking in increased fiscal space, the government has lost a golden chance to introduce real reforms. The government should realize that mere tweaking of the taxation system would not relieve our pains; rather, an overhaul of the whole system is imperative. Are we ready for a situation where the current fiscal ease no longer exists (e.g. when remittances dry up and oil price skyrocket again)?

Second, one wonders why it takes a negative growth number in Pakistan Economic Survey to make the government realize that the agriculture sector and rural population in Pakistan is in distress and export based industries are struggling? Why is this problem not addressed in the bud? Why are there no indicators available that help government see what is happening to Pakistan’s economy?

Both points raised above allude to some fundamental problems in governance in Pakistan in general and budget-making in particular. There is a growing consensus among economists and political thinkers that the main problem of Pakistan is not fiscal deficit or tax collections or fertilizer prices or zero-rating of textile. The main problem is bad governance and this is plaguing every sphere of public policy making. As long as governance is poor, more money would not solve our woes. Because, if the pipes are leaking, pumping more water would not do any good.

When it comes to poor governance, budget making in Pakistan is no exception. None of the latest budgets marks an improvement in this regard. Government budgets should be a documentation of what is the government’s vision for a better Pakistan and what it is doing to realize that vision through fiscal measures. Unfortunately this is not the case in Pakistan, particularly this year. The budget’s proposals seem to suggest that they have been designed to counteract the absence of, or lack of, implementation on a long-term vision. It is, as if, devoid of imagination, PML-N has blurted out its safest response to the current challenges.

For the budget making exercise, we can break bad governance into three kinds of failures. First is lack of presence/ownership of sound, long-term socio-economic policies. Second is lack of properly functioning monitoring and evaluation systems that track and review government performance. Third is the failure of the budget to take the policy documents and lessons learned through monitoring and evaluation into account. Let us discuss briefly what is needed.

As active citizens of Pakistan, we should demand government to have updated policy documents about various sectors of the economy. There are some such documents already in place. One of the most prominent development policy document is Vision 2025. But what is its value for Ishaq Dar? Did he mention Vision 2025 even once in his budget speech? These policy documents are good for nothing if budget makers do not care for them. Government should be demanded to take such plans seriously.

We should also demand reliable and robust data collection mechanisms to be in place. These mechanisms will ensure that good quality, meaningful data is produced to enable researchers and policymakers draw conclusions about what is working and what is not. It is sad that so much data is being churned out by the government agencies such as Pakistan Bureau of Statistics and at the same time credibility of this data is questioned by independent analysts. Even as basic indicators as GDP are called into question. Recently, Social Policy and Development Centre, led by former finance minister Dr. Hafiz Pasha, has gainsaid government’s GDP growth figures. SPDC has estimated that the GDP growth rate in 2015-16 is 3.1 percent instead of the claimed 4.7 percent. This difference is huge and calls PBS’s credibility and ability to aid good policy making into question. Bad data leads to bad policy recommendations. National accounts (and tax collection figures) have been fudged in Pakistan since 1990s and this thing should not be allowed to go on.

It is also necessary that there are monitoring and evaluation frameworks in place to check progress against the policy outcomes. One institution for such work that was made by Musharraf government in 2000 was PRSP Secretariat at Finance Division, Government of Pakistan to monitor progress against Poverty Reduction Strategy Paper. UNDP later supported this initiative with the project “Strengthening Poverty Reduction Strategy Monitoring”. Similar efforts are needed today to monitor progress towards various policy goals. In this regard, non-government actors should support research institutions to give independent policy advice and reviews to the government. There are good research institutes in the private sector such as research institutes such as Sustainable Development Policy Institute, Social Policy and Development Centre and Centre for Economic Research in Pakistan (that works to promote evidence-based policy designs) which provide independent feedback to the government.

The government should also make good use of the collected data and research by external research institutes as well as its own agencies. Governments all around the world are increasingly relying on evidence-based policies and are moving away from traditional before-after comparisons of development outcomes to more rigorous experimental designs to review and formulate their policies.

After good policy documents are in place and good data is available to tell where we stand, government should take into account all these plans, results and lessons learned and make the budget maintaining a clear link between what remains to be achieved and what is planned to be achieved through the budgetary proposals. Only then, can the budget be something of importance for the common people. Only then the budget can be a serious reflection of government’s reform agenda. Only then the budget can be a tool for effective fiscal policy and good governance.