Budgeting on hope.

Byline: Khurram Husain

THERE are two problems when discussing the budget and the attendant Economic Survey this year. First is that there is not much of a budget to discuss. At the heart of every budget (in Pakistan anyway) is a revenue target, along with a plan on how the government intends to pursue this target. This decides the size of the resource envelope the government has to play with, and although many times they work backwards by first fixing expenditures to see what sort of revenue and borrowing targets they will need to meet costs, ultimately the revenue plan places hard binding constraints on what they can credibly allocate.

This year there is literally no revenue plan. No explanation on how the trillion rupees of additional revenue will be collected. First consider that the net federal revenues, meaning the amount left with the federal government after transfers to the provinces have been made as per the National Finance Commission award, is Rs3.7tr and expenditures on debt servicing and defence (the two largest expenditure heads) is Rs4.235tr. Meaning the states runs out of money before it is even done paying its creditors and the armed forces, so never mind development, salaries and pensions, subsidies or anything else.

This year they dispensed with the trouble of showing how they will meet their target altogether. In FBR revenues they have announced an incremental target of more than Rs1tr (compared to the thrice downwardly revised target of last year), but one searches in vain for a clue as to how they intend to meet this. News reports citing unnamed sources tell us that the finance adviser told the cabinet that the target will be met by resort to measures like 'petroleum development levy, profits of the State Bank of Pakistan, privatisation of at least three state-owned enterprises and further expenditure cuts'.

The night of the budget Hafeez Shaikh appeared on TV and said that Covid-19 and the uncertainty surrounding the question of further lockdowns before the year lets out mean making plans is not possible. Next morning he repeated this explanation in the post-budget press conference. This basically means we are now in make-it-up-as-you-go territory.

This year there is literally no revenue plan. No explanation on how the trillion rupees of additional revenue will be collected.

The second problem in discussing this year's budget, and it pains me to say this, is that economic discourse in this country (which was never all...