Budget and beyond budgeting.

Byline: Mohsin Raza Malik

The PTI government has presented its first 'pro-people' and 'growth-oriented' federal budget in the National Assembly in the form of Finance Bill 2019-20. The proposed budget is being claimed to have prepared to achieve a macroeconomic stability in Pakistan. The government looks interested in reducing the budget deficit through adopting a strict fiscal consolidation strategy. So, it has set an ambitious and all-time high target for tax revenue in addition to taking a number of austerity measures. The government also intends to document the country's black economy through introducing various taxation measures, especially in the real estate sector. Earlier in last month, it also introduced a so-called income and assets declaration scheme for the same purpose. The government has also allocated a handsome amount for infrastructural and social sector development in the budget.

The proposed budget essentially represents multiple macroeconomic compulsions and fiscal constraints faced by the incumbent government. It can certainly not ignore such compulsions and constraints while formulating its fiscal and monetary policies in the country. Noticeably, the annual federal budget is gradually losing its significance and relevance the country's economic milieu. It has more become an annual balance sheet, undesirably prepared and presented by the federal government, merely as a mandatory constitutional requirement. Irrespective of the 'facts and figures' stated in the annual budget statement, there have been a number of macroeconomic factors which together shape the contours of federal budget as well as the economic outlook of the government. Essentially compelled by such factors, the federal government usually makes certain necessary fiscal readjustments in the budget in the form of a number of subsequent 'supplementary budgets' and periodical SRO's, diminishing the utility and significance of the formal budgetary scheme.

The government generally sets some ambitious revenue and growth targets in the budget after exaggerating its economic performance. On the other hand, it modestly projects fiscal deficit in the country. Thus it artfully prepares a plausible annual balance sheet of the government's expected revenues and expenditures. The annual budget statement made by the government minister has just become a hotchpotch of the federal government's fiscal, monetary, trade and export policies. It also contains the micro-level...

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