Post-Budget situation.

• Author: Asghar, Arooj
• Position: Pakistan 2019-20 national budget

Byline: Arooj Asghar

June 11th was the lucky day for Hammad Azhar, Minister of State for Finance and Economic Affairs as he presented federal budget in the National Assembly of Pakistan for the first time in his public life. This budget is in fact the second budget of current federal government but first budget of this government for a full year. There are a number of areas which the government has tried to address in the 2019-20 budget but there are many areas which are either not addressed directly or are completely ignored. Big challenges country is presently facing are low growth, current account deficit, poverty, inflation, subsidies withdrawal, price hike, agriculture development, and education and health. Every budget is termed as jugglery of words and numbers but it seems that there is something really missing in this budget. On income side, numbers are unrealistic and expenses are under stated.

Pakistan tried to get funds from its close friends and also got some as well, and later finally approached IMF for a bailout package. The government has finally disclosed its Plan B (a rescue plan) even before the implementation of its Plan A after coming to power in 2019, unlike others who conceal their Plan B until their key plan fails. Prices of energy and interest rates were increased even before entering into the program of IMF. No one should have now doubts in mind that IMF is coming with full force. It is said that the budget is drafted on the guidelines given by IMF and it would be one of the biggest beneficiaries of this budget. IMF will be able to sell its debts at a higher cost and will take full control over the policymaking rather than just preparing the policy.

Opposition parties have asked government to increase the salaries and minimum wage to Rs. 20,000, which is practically very difficult. There should be a linkage between increase in salaries and the productivity of the labor. Blanket increase in minimum wages will increase the cost of production and will also increase the aggregate demand of goods, which will have fuel the inflation. It can be said that Rs. 20,000 is just a small amount and what that person can get from this amount. There should be a systematic basis and reward should be given to efficient labor. Instead of increasing the salaries, government should link the minimum wages as per the skilled, semi-skilled and unskilled labor category, as we see in the Middle East. If minimum wage of a skilled worker is...