A stabilised budget.

The budget documents have as- sumed an accommodative mon- etary policy along with a flexible exchange rate regime with mod- erate inflation of 6.5%. By taking these assumptions, the policy- makers have to be cautious while formulating and implementing the budget due to vagaries of the exchange rate. In addition, a real gross domestic product (GDP) tar- get of 2.1% paints a rosy picture of an otherwise bleak situation.

For the upcoming year, the gov- ernment has not increased the sal- ary of its officers after a long time. However, pressure is mounting on the government from differ- ent quarters that these officials deserve an annual raise. This announcement has been made under tough economic circum- stances so that the Extended Fund Facility (EFF) remains on track.

Federal estimates of revenue col- lection are not realistic, especially for the upcoming year, as the government expects around 27% growth. Under a booming econ- omy, a government may expect that much growth in revenue.

In addition, the government first spends and then collects revenue. If spending of the government is curtailed, the revenue will not increase to the desired extent.

However, the Federal Board of Revenue's (FBR) tax collection target of Rs4.96 trillion is quite ambitious. Heavy dependence on general sales tax (GST) along with withholding tax would continue, though the share of direct taxes is projected at around 41%.

Since the international crude oil prices are quite low, the gov- ernment has increased the pe- troleum development levy target to Rs450 billion to fetch precious non-tax revenue for itself. This won't allow the government to pass the benefit of low in- ternational oil prices on to the masses. Hence, we should expect relatively high petrol prices in the coming year.

Even credit rating agency Fitch forecasts that the revenue target would not be met due to eco- nomic slowdown and absence of new taxes. The unachievable revenue target would result in a downward revision in the na- tional Public Sector...