In Pakistan, hopes ride high on Imran Khan’s new budget

All budgets are political. At least this is how it is in Pakistan where politics is about public wanting relief or dreading trouble as new policies are announced. Governments respond by playing with numbers. They promise their voters goodies.

They tell them what great things they want to do for them but also complain that the kitty is in such a bad state that they wont be able to fully satisfy all of them — not this year anyway — so they should be happy with whatever little they are getting.

This being the national history of budgets, the one presented by the Imran Khan government last week fits the format.

There is much number crunching in it, but the budget speaks of improved growth, sounds confident and hopeful that agriculture, business and industry will do wonderfully well in the months ahead, allowing more revenues to be collected. It claims to have brought the economy back to life and holds up the prospect of more jobs and more cash reaching homes.

A budget like no other

But in another way the budget is like no other that this government has presented. This being its fourth in a row — presented by its fourth finance minister — rebels against the generally gloomy forecasts of the economy sinking under the weight of coronavirus and policy confusion.

The new GDP growth rate, 3.94 per cent projected to go near 4.8 per cent in the coming year, is the first time a numerical good news has been sent out to the nation in the last three years from expert calculations of expenditure and revenue.

Moreover, this is for the first time that the budget is breaking free of the hold of the conditions that the International Monetary Fund (IMF) has imposed through its programme, which will return shortly after being suspended because of COVID-19.

That’s why the budget wants to do a lot of public spending and offer subsidies (a real no-no as far as the IMF is concerned) and seeks to undertake projects that will necessarily expand deficits but help growth — a strategy international money lenders loathe and allege to be the main reason for Pakistan’s many economic troubles.

Some taxation relief may also not allow the government to collect the revenues that it has committed to the IMF as important targets of the programme. But that’s all right.

Soul of the budget

As one government minister has put it, “it is us and not the IMF that has to fight elections.” That in a way sums up the soul of the budget. It is all about managing damning criticism the government has faced from its opponents who quote unemployment, poverty and inflation figures to score political points.

The Imran Khan led Pakistan Tehreek-e-Insaf (PTI) government wants to create a growth momentum based on spending and consumption to push the economy up and pick up the fruits of this activity in the next elections.

The strategy may work except that the IMF can bring up its conditionalities and the threat of programme suspension to halt. The joyride of spending and subsidies can come to a stop in that case.

Informed circles in the government however think that they have convinced the IMF to hold its horses, not because of the logic of their political concerns but because of the fact that Pakistan and the US are in deep talks over the future of Afghanistan.

This strategic engagement, official sources believe, allows the government extra weight to pull with the IMF. It might sound like a bit of a long shot but this won’t be the first time that something like this would happen.

Washington has been key to shaping international lenders’ views and reviews of Pakistan’s economic needs and compulsions in the past. Another “affirmative action” cannot be ruled out.

But many of these issues are long-term debate about how the economy will proceed. Will it continue on the boom-boom path the government claims it has created through this budget or will it come to a sputtering halt after having used up the limited fuel it has in its tank on account of IMF graciousness?

For now, the government is enjoying its own narrative of having finally beaten the ghost of negative growth and being able to at least tell a tale of success.

Syed Talat Hussain is a prominent Pakistani journalist and writer. Twitter: @TalatHussain12