Pakistan Budget 2023: Road to doomsday

The military sponsored government of Pakistan has unveiled their budget for financial year 2023-24 amid high speculations and unprecedented monetary crisis. Surprisingly, while everyone was expecting some efforts towards upliftment of country’s economic situation in this budget, the ruling Pakistan Democratic Movement (PDM) government made suicidal attempts. There is hardly any economist in the world except few of Pakistani origin who can vouch for the success of this budget.

 

For India, Pakistan is an important neighbour, and its stability is important for us. For a country which has huge stockpiles of nuclear weapons and a rogue Army relying on terrorism, any political or financial instability will give rise to non-state actors which will not only take Pakistan to the doomsday but will be detrimental for Indian interests too. We have witnessed it in the past. Let’s analyse this budget from a layman’s point of view. 

 

1. Flimsy Budget projections: It is amusing to see the figures when the Pakistan government unveiled their budget for the year 2023-24. The total budget estimate for last year (2022-23) was about PKR 9.5 trillion. This year, not only the revenue collection has decreased but Pakistan recorded almost negative or just 0.03% GDP growth for the first time. In the coming year, all the growth projections of Pakistan are negative and even the world bank has issued an optimistic figure of 0.4% growth. Despite this, the Pakistan government has projected a self-styled 3.5% growth of their GDP which is possible only in dreams. Traditionally, all the budget estimates are decided by the GDP growth but Islamabad presented a huge budget of PKR 14.461 trillion which shows a whooping 52% increase over the last year. 

 

2. Massive budget deficit: Finance Minister Ishaq Dar, who himself is a Chartered accountant from England appears to have no idea from where his 14.461 trillion PKR are going to come. As per his budget estimate, the total net fiscal deficit (after adjusting the surplus money) is going to be PKR 6.9 trillion. He has set up ambitious tax collection targets of almost 9.3 trillion PKR, but there is no clarity on how Pakistan, while struggling to complete even 7 trillion collections target this year, will achieve this figure of 9.3 trillion with no increase in taxes, no additional levies, and no efforts to increase the collections. While the GDP growth is projected at 0.3%, there is no way that it can achieve its collection targets and, in that case, the budget deficit will further increase.  

 

3. No planning to cover the budget deficit: With almost PKR 7 trillion budget deficit, PDM government did not mention any planning as to how they will cover this gap. Although finance minister Mr Dar mentioned in his speech that his country is planning to bridge the entire budget deficit from external loans and is ready to borrow another USD 24 billion from various countries, the statement seems far from a sensible one. Pakistan’s reviews with the International Monetary Fund (IMF) have failed and there is no hope that it will get any help from them now. All their credit ratings have sunk to the rock bottom, and it is near impossible that any global lenders will give them even a penny as loan. There is another challenge. Pakistan is already paying 52% of its budget in debt servicing. Even if they dream that this loan will materialise, there’s a big question mark on how will the government of Pakistan pay its debt from next year onwards.

 

4. Massive allocation to defence: Whatever be the situation of Pakistan, the only people who always benefit are “Rawalpindi Boys”. Even if Pakistan is moving towards an economic doomsday, there is no effect on perks and emoluments of Pakistan Army. This year, Pakistan government announced a huge 18.5% increase in their Defence budget from the initial estimates and 15.5% from their revised estimates over last year. Last year, they allocated a total of PKR 1523 billion towards defence but this year the initial estimate itself has been PKR 1804 billion which is likely to rise after a few more adjustments in the coming year. This PKR 1804 billion translates to roughly 12.5% of the entire budget estimate and interestingly, this is the biggest component of Pakistan’s budget after payment of debts. No country in the world acts in this way but Pakistan is not run by politicians but by its military. Hence, no one has any courage to speak against the “Rawalpindi Boys”. They may let the entire population of Pakistan die out of hunger, but they will not cause any harm to the interests of its Army Generals.  

 

5. No hope for any development program: Imagine a country where people are dying out of hunger, killing each other for a bag of “Atta” and selling their kids for food and the government is keeping its eyes closed. This year, the Pakistan government allocated almost negligible amounts for development programs. Ideally, they should have cut down the subsidies, reduced the Defence Budget and provided some more relief to their countrymen but unfortunately, the allocation towards the developmental programs is almost nil and almost entire of the one trillion PKR figure which is allocated in the name of developmental program, goes towards payment of power subsidies to Chinese Power producers. On the other hand, they not only increased the salaries of government employees by over 35% but also increased their other emoluments and reliefs by 50%. Inflation is common to everyone, be it a government servant or a common man but this partiality is beyond the imagination. Ideally, some of the amount could have been utilised in giving benefits to common people too but that did not happen. 

 

Pakistan’s current budget is made totally on speculations and flimsy planning. It may look good on paper but is not at all workable. As Pakistan is nearing a sovereign default, it may try to sell its weapons, missiles and even nuclear weapons to any non-state actor or any rogue country for a few dollars and that will be a catastrophic situation. Their current budget is totally out of practicality and lacks even the basic planning. This is a clear-cut indication for a default and in the eventuality of this, India and the global community have to remain cautious.

 

The author is a veteran from the Armed Forces. He is a known Defence Strategist with keen interests in international affairs, maritime security, terrorism and internal security.

(Disclaimer: The views expressed above are the author's own and do not reflect those of DNA.)