Former Sindh governor Muhammad Zubair, while criticising the economic policies of the incumbent government, has termed the recently announced mini-budget as a ‘mere political statement’.
“The government has been under extreme pressure. Its wayward economic policies have all but crippled the economic activity. Pakistan was expected to grow at 6.2pc. Instead, we are now talking about just around 4pc economic growth. This in itself will have disastrous consequences on unemployment, revenue generation and fiscal deficits,” he stated.
The PML-N stalwart said that the government came up with “all the goodies to create a feelgood factor” after months of getting bashed by the economic circles.
“The mini-budget meant overall revenue reduction of Rs7 billion. By December, revenue shortfall was Rs175 billion. There was no mention how this shortfall will be plugged. If the same revenue stream remains, our total revenue shortfall could be in the range of Rs300 billion. There was no mention of any revised target. If you are making a budget speech, it is amazing that you don’t mention this shortfall,” he lamented while criticizing Finance Minister Asad Umar, who also happens to be his brother.
Zubair said the finance minister also “forgot or deliberately ignored” to talk about higher than stated expenditure figures. “It’s clear that our expenditure will overshoot by hundreds of billions, as we have a higher than planned defence spending. Also, due to rupee devaluation and SBP policy hike (from 5.75pc to 10pc in 2018), our debt servicing will overshoot by Rs700-800 billion. Again, along with revenue, expenditure is the other most important component of any budget.”
He said the shortfall in revenue along with increased expenditure meant that the fiscal would be significantly higher than planned. There was no mention of how this increased fiscal deficit would be managed, he added.
“We could expect new taxes in the next few weeks. If that’s not done, the gap will be financed through borrowing. In either case, it will contribute to higher inflation,” the former governor stated. “The benefits dished out to non-filers is a serious concern and against PTI’s own stated policy of the past. Why should the non-filers get any benefit? How will non-filers be motivated to become filers? How will the tax base be expanded in future? This is an easy way out and reflects a government struggling for survival.”
He said there was no plan to contain circular debt in the mini-budget, which has significantly gone up from Rs1.1 trillion to Rs1.4 trillion ever since the PTI govt has taken over. The absence of any concrete plan meant masses could expect increases in electricity tariffs, he added.
He said the PTI leadership has already indicated revision in NFC Award, which would reduce money transfers to provinces. This is based on its inability to expand the tax revenue. “Just for information, PMLN was able to increase tax revenues at 20pc per annum in four years. That allowed tax revenues to almost double during the 2013-2018 period, literally doubling the money that provinces got during this period.”
On the government’s credibility, he said, “Since coming into power, the government has taken consistent U turns and has publicly defended those U turns. Why should we trust the mini-budget based on PTI’s own acknowledged criteria of de-committing on vital national issues?”
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