Budgets are a strange phenomenon in Pakistan. We become eager a week before and we become irritated a week after the budget. Years after years I have witnessed the same thing. If party A is in power, all their supporters will support the budget without even knowing what is in the budget and how it is even prepared. Whatever their leaders say on the national television, supporters mimic it like parrots on their social media. When the same party A is in the opposition, the budget to them is the worst plan for the economy and they again come on to the national television, say things that their supporters repeat like parrots.
Why does that happen ?
Two reasons. One: Budget is a time of politics in countries like Pakistan. For the incumbents to praise themselves and for the opposition to bash them. Two: Nations like ours are always looking towards the government for some handouts. Yes, I am using a very strong word here “handout”. I am calling it a handout because when the rich of the country look towards the government for support every year even when their businesses are booming then there is some flaw in their business plan or in their character. You decide, I am nobody to do that. Poor should look towards the government every year in countries like us because these socio-economically downtrodden segment of the society is always in need of the governments’ help and justifiably so. But the problem is that due to lack of knowledge and especially financial knowledge they do not understand the intricacies of the budget, its shortcomings or its benefits. Again the political party they support they tow the lines of. It is easier to remember a sentence and repeat it then to justify that sentence with logic and debate. So again they listen to their political leaders on television and repeat word to word what they hear and remember.
The world’s largest budget is the American budget, $4.8 trillion dollars compared to ours of $50 billion maximum on the liberal side. Have you ever heard a national debate in America within the circles of social media or common people discussing the budget ? No. I have not at least in my decades of being on Wall Street. Why is that ? Because even the opposition in most cases supports the good aspects of the budget in America or in England or for that matter in most developed countries and perhaps that is the secret that they became developed. By doing what is good for the country and leaving politics for the rest of the 364 days of the year. Of course they oppose the bad things in the budget but they do not play politics on it.
Now About The Pakistani Budget:
Before I discuss the Pakistani budget let me shed a little light on my personal experience. For the past 10 years I have been here in Pakistan and have been witnessing our budgets, I have yet to find the nation be happy with any budget. Why ? Because nobody tells them the good things of any budget. Every budget has good and bad. No matter which government has presented it. Why do these politicians fight on TV and not in the Assembly and debate on it ? Because most of them do not even understand how to read the budget document. Zardaris’ government made the budget, there were some good things in it. Nawaz’s administration made the budget, there were so good things in it. Now Imran Khan’s finance minister has made the budget and of course there are some good things in it as well. But to be much unbiased, in 100 years of world’s yearly budget history, never has the group of nations faced a pandemic right before the budget calculations. Especially for a country like Pakistan with limited resources, I think we have done alright a few months before the budget and now in this budget. I have used the word “alright” very carefully instead of a word exaggerating the accomplishment because no administration could have done any better with such limited resources.
Let us see what was good pre and post budget.
Interest rates were brought down 525 basis points from the time Covid-19 hit this world. Pakistan became the only country in the Emerging world to have brought down the rates as much. This has absolutely helped the large corporations who employ millions of people and use bank credit lines to finance their operations. This has also somewhat helped curb the inflation a bit. It would have been a disaster if the rates were kept high and Covid was still spreading because economic activity aside, corporations would have begun to declare bankruptcies or would have defaulted on their bank loans. That would have been the end of Pakistani economy.
Rs 1.2 Trillion Relief Package:
The biggest relief package given to the poor in history of Pakistan. Never before any government was able to take out such a huge portion of our GDP, almost 2.5% of our GDP or almost 20% of our annual budget and distribute it to the poor of the country without a single ounce of human interaction. So no corruption can be done.
Rs 50 billion Agriculture Program
Rs 50 billion was distributed to the farmers and Rs 400 per Urea bag was reduced in price.
Electricity Bill Relief:
3 months’ worth of electricity bills were waived off which the government paid itself for small commercial outfits. I think this was one of the biggest relief measures for small businesses and shop owners.
Sales Tax Refunds:
The highest number of sales tax refunds were given in any particular month in order to facilitate and economic activity and encourage exports.
Rs 200 billion For The Daily Wagers
The most affected segment of the society in any country is the one where the man or a woman has to wake up in the morning and earn for that particulars days’ meals. These poor people have no savings, no bank accounts, no credit cards, no relatives or friends who can help. These are the people who deserve the most support from the government and they received Rs 200 billion in support.
Payroll Financing Relief:
SBP allowed Rs 100 billion worth of payroll financing at 3%. This helped companies from firing their workforce. I am sure no politician even told you this neither any Anchor. I wonder why ? Let me keep wondering then.
Loan Deferment For Car/Credit Cards and other Loans:
If you own a car or a house mortgage or any other consumer loan, you can defer the principle payment for one year. Just call your bank and they will do it. Exporters can also defer their loan payments on such conditions for one year.
Another Rs 850 Billion Allocated To Fight Covid-19
In addition to the Rs 1240 billion, GoP allocated another Rs 850 billion for fighting Covid-19.
Let me summarize by saying that if I were the Finance Minister, I would have never presented the budget for the whole year. I would have announced from day one that this budget is for saving lives and will only be for 4 months. I would have put a freeze on most mega development projects and diverted the funds towards saving lives. If there was anything left in the amounts after successfully beating the virus, I would have diverted the funds back to their original heads of accounts.
So in this difficult time of Covid, let’s highlight what positives this government is doing and criticise the lack thereof. Because at a time like this , lives matter. Economy does not. If the people are alive, economy will be tackled. Let us demand from this GoP to do more. But more to save lives and protect the livelihood of the poor.