People over profit: A closer look into the so-called ‘IMF budget’
While the opposition chanted slogans against the budget, creating havoc, it is really the IMF budget or talks about relief for the people?
Pakistan Finance Bill (budget) for the fiscal year 2019-20 was presented in National Assembly on June 11th, 2019 by the Minister for Revenue (MfR) Mr. Hammad Azhar amid to the shouts and sultry chanting slogans of “Na-Manzoor” (not accepted) or calling it the IMF budget.
I really doubt to the economic acumen of those parliamentarians who were involved in this opposition led crew even with or without placards and shouts; because after listening and eventual reading the budget speech, I remained speechless and my mind boggled for a minute after finding in the fact sheet that mere Rs1,800b will be spent on people of Pakistan in the areas of social, economy and culture.
Who would doubt the sincerity of PMIK (Prime Minister Imran Khan) after he courageously gave Pakistan the 1st Cancer hospital and world class NUML university, and so does that sincerity was reflected in this bill (budget) as almost 20% of the total layout of bill (almost 8.24tn) will be spent directly or indirectly on the people and people scoping projects.
It talks about the ‘people’:
The whole bill, that is being labelled as IMF budget, either discusses the people related matters if we see in detail that it talks about Higher Education & services cum Science & Technology (77b). It speaks about health including Insurance cards for 3.2 million families (11b), Youth Skill dev. (5b), to promote entrepreneurship (10b) Ramzan Package (2.5b) and outreach of BISP increase to Rs.5,500/Q for 5.7 million families (110b).
Financial support to increase from Rs750 to Rs1000 for BISP families related 3.2 million children, 500 shelter and Ehsaas homes to be developed, clean drinking water and nutritional schemes (93b), Kamyab Jawan Program (100b), pay increments by 10% for 1~16 grade and 5% for grade 17~20 on ad-hoc basis.
It also speaks about the increase in pension fund by 10%, disable employees to get increase in conveyance allowance from Rs1,000 to Rs2,000, 25% salary increase for private secretaries and Rs216b subsidy for 75% electric power consumers with less than 300 units consumption, moreover some programs are under provincial domains and will be announced soon but we can still expect that the above detail will increase after that.
While it was being labelled as ‘IMF budget’, some allocations were also made for federal development projects like increase in water storage capacity (70b) and Dassu Hydro Power project (55b total for this segment 80b), Karachi and Quetta city development projects (85b) and FATA development package (152b).
We cannot doubt the leadership abilities of PMIK if truly compared to the current political elite and that’s what he showed in booing the near-to-default situation as soon he stepped in mid of August 2018 after his out-of-the-box solution of reaching the most close and friendly countries like China, KSA and UAE to support with Dollar (US$9.2b) as capital and deferred payment agreement for oil purchases, hence Pakistan skipped default.
The same explanation was given by MfR during his speech, though he also mentioned some more challenges being dealt with prudence whether it was to decrease imports and increasing export through reforms or presenting amended finance bill.
Balance of payment and current account deficit crises:
Due to the reforms the Balance of Payment and Current Account Deficit crises were mitigated. He (MfR) also talked about the future challenges that are measured and will have to be handled with more efficient financial management either through IMF bailout program (of US$6b), increase in remittances and value added exports, decrease in non-operational imports, privatizing the behemoth state corporations or better and improved tax collection (Rs568b due to fresh tax measures). The budget expects to minimize the current account deficit upto US$13b this year and to decrease it further by US$6.5b.
In his latest address, PMIK requested the nation to pay their fair due share of taxes in order to run the country without foreign assistance. He clearly mentioned that half of the revenue is being used for Interest expense and peanuts are left to run the government, he encouraged the nation to get benefit of the Amnesty scheme, declare their assets and become part of the tax net as it is vital for the tax reforms. If we also see the latest figures from the budget we will observe that its again a deficit budget and Pakistan budgets are merely with deficit since long time back.
Hence massive tax collections as revenue will the prime objective of government for the coming year and for that particular purpose the government is spending billions on youth either through Jawan program or skill-set (including digital) development initiatives, now our youth must take up the opportunity to get maximum benefit of these schemes.
The government has also given a suggestion of tax credit if corporations are employing the young graduates (who graduated after July 01st, 2017) equivalent to their salary expense and with Pakistan Housing Scheme thousands of jobs will be created as it will actively utilize 28 industries related to construction arena.
Social sector development is imperative:
I also positively expect that social sector development is mandatory to steer Pakistan economy in the global digital space and it’s a very good thought that tech related exports are not being taxed in the budget which is giving tremendous prospect to the freelancers to bloom their overseas sales irrespective of what Rs/$ parity is in future.
Although, measures taken in the ‘IMF budget’ are majorly depicting an emphasis on social sector development alongside dealing the tax reforms, as explained by PMIK that its not a one night story. It’s a journey (process) and it must be continuous and he has done his part by putting People over Profit (us over budget surplus), hence, now it is our time to part our efforts for the completion of success process with zeal and zest.
Good Luck Pakistan!
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