Economic problems remained same since decade like low tax to GDP, minimal export growth with negligible value addition, lack of Pakistani international branding, and as whispered by present government itself the pace of economic slow- down, rising inflations (which eased after COVID 19 record decline in oil prices and not due to government policies) because before COVID 19 the inflation was at its peak. Government still believes in rhetoric, tall claims and unrealistic targets. Five million homes in remaining three years because two years had already been passed without any progress in this target similar to BRT Peshawar and now in remaining three years government has to make 1.66 million houses per year , monthly 138,333 monthly , 4630 daily and 193 home in a hour which seems impossible. Similarly the case is with 10 billion trees which in remaining three years government would need to plant 333.33 million trees per year, monthly 2.77 million , daily 92,592 daily , 3,858 per hour 64 plants per minute and 1 plant per second. One can imagine what sort of day dreaming is shown to the nation.
Federal Minister for Industries and Production Hammad Azhar presented Federal Budget 2020-21 on Friday 12th June, 2020. Since Dr. Hafeez Sheikh who is actual leader of Prime Minister’s economic team is not elected so he was unable to present his own budget therefore this service was done by Hammad Azhar. In his budget speech he has shown a rosy picture of Pakistan’s economy and tried to convince nation that present government is doing its best to provide every possible relief to downtrodden and unprivileged segments of nation. He has tried to give sugar coated pills giving impression that economy is on right track and is moving towards the stability. Whatever has been indicated is the one side of coin as stated that current account deficit decreased by 73 % from US$ 10 billion to $ 3 billion . Trade deficit came down by 31 % from $ 21 billion to $ 15 billion and fiscal deficit reduced from 5 % to 3.8%., FBR revenue increased by 17 % and government was on right track to achieve target of Rs. 4,800 billion . Non tax revenue increased by 134 % and against the annual target of Rs. 1,161 billion, higher foreign debt of US$ 6 billion repaid against $ 4 billion , however foreign exchange reserve remained stable.
According to budget speech government took many steps to improve the ease of doing business which resulted in improvement in ranking from 136 to 108 of 190 countries.
There are also some bitter pills briefly mentioned in budget speech which are : Budget deficit revised upward from 7.1 % of GDP to 9.1 %. FBR revenue loss has been projected to Rs. 900 billion. Non Tax revenue of the federal government has been reduced by Rs.3,300 billion which brought down GDP growth projection from 3.3 % to -0.4 %.
That is fact that the economic picture is not rosy one as painted by government minister and there are so many weaknesses appeared in economic planning of the government. Present economic team including Dr. Hafeez Sheikh adviser to Prime Minister on Finance and Dr. Baqir Raza governor State Bank of Pakistan. Prime Minister’s own team led by Asad Umer was replaced by the present one because despite reluctant government was forced to get help from International Monetary Fund. The new team was suitable to pursue the policies of IMF and follow the target set by lending agency. So the nation had to swallow many bitter pills and during last year growth declined , unemployment increased, industry suffered badly and inflation was highest. Thank to decline in oil prices and again the spread of Covid 19 which decreased demand and prices of oil came down to record level. This also loosened the tight grip on Pakistani imports of which oil has the lion’s share. But this devastating pandemic brought highly negative impact on Pakistan’s economy which is estimated to Rs. 3,300 billion and GDP growth was brought down from 3.3% to -0.4 %.
The bitter fact is that the Budget 2020-21 is the toughest budget of the history of Pakistan when Corona Virus is moving towards its peak and so far 154,868 patients have detected positive cases which is 16.27 % against total cases , this percentage is three times higher than that of India which although is the fourth largest corona affected country but its positive cases are 6 % of its tests. So it is assumed that effects of corona would continue for another two to three months and in number of areas of Pakistan’s largest cities like Lahore and Karachi a strict lock down in affected areas has been announced. So it seems that the target set for 2020-21 are not realistic one. New cases in 140 countries have been found including USA, Russia, Brazil, China, India, UK, Spain, Italy, Germany, Turkey , Saudi Arabia etc. This clearly indicates that it is too far to think about Corona Free world. It is therefore predicted that the negative effects of Covid 19 on global economy will remain in another few months.
The government followed the instruction of IMF to pave the way for US$ 6 billion support loan. So it can be assumed that another two years of economy would be tough. The measure taken by government would further increase cost of doing business. The next net is still narrow and tax to GDP ratio is 11% in population of 220 million only 2 million people file tax return out of which 600,000 are salaried people about 30 % of total registered , 380 companies alone account for more than 80 % of total tax. There are over 341,000 electricity and gas connection on commercial basis and only 40, 000 are registered with sales tax. Only 1.4 million out of 3.1 million commercial consumers pay taxes. There are estimated 50 million bank accounts but only 10 % 5 million pay taxes. Out of 100,000 companies registered with SECP only half of them pay tax.
The Budget estimates total Rs. 6,573 billion including FBR revenue of Rs. 4,964 billion. Transfer to provinces under NFC award is estimated Rs. 2,874 billion and net revenue is estimated Rs. 3,700 billion.
For expenditure side total federal expenditure is estimated Rs. 7,137 billion while budget deficit is projected at Rs.3, 437 billion which is 7 % of GDP with primary balance -0.5 %. Government is planning to borrow more external loan of Rs. 2,157.5 billion. Total debt servicing is marked at Rs. 3,663. 37 billion. Amount allocated for health is only Rs. 25.49 billion while for education Rs. 83.6 billion . Interest is being paid Rs.2,946 billion which means monthly Rs.245.5 billion , daily 8.81 billion , per hour Rs. 5.66 million, per minute R944, 444. This figure shows clearly that the lion’s share of resources where are going and why the economy’s fruits not reaching to down trodden and have not’s. Country is under Himalayan debt and interest burden and the next generation has to pay its price.
The size of GDP is declined Rs.w3,300 billion and interest payment is 59.36 % of FBR’s estimated tax revenue and 53% of total tax revenue. Government borrowed Rs.3,905 billion in 2019-20 which average per month is Rs.324.42 billion and Rs.10.84 billion per day, Rs. 45.19 million per hour. Interest payment is 128.52 % of more than defence budget .Interest payment is 11,475 % more than health budget .It is 3,434 % more than Federal Government’s education budget. Total foreign debt is Rs. 43,000 billion.
SOLUTION
Ø Try to get rid of IMF dictation as soon as possible
Ø Austerity measures at every government department
Ø Implementation on Dr.Ishrat Husain’s reforms
Ø To privatize 43 organization Wind up 8 organization, Transfer to provinces 14 or organizations, merge 35 organizations
Ø This restructuring would lessen the burden on Federal Government
Ø Get rid of Sugar, Atta, and Gandum and Power mafia who in shape of subsidies and other concession sucking the blood of economy. They were part of almost all previous governments and the current one as well.
Ø With existing team of PM economy could not be restored .Nation needs competent, hardworking, sincere ,patriotic people
Ø NATIONAL EDUCATION AND HEALTH EMERGENCY programme should be launched under the Supervision of Dr. Abdul Qadir ( Education) Dr. Abdul Bari of Indus Hospital (Health)
Ø Dr.Amjad Saqib of Akhuwat , Bait us Salam Trust which is providing education to 5 million students including a revolutionary prorgamme of free O level, Hifz , shaha da tu Alimiya education , Alkhidmat which has a countrywide network of sincere and God fearing people and SHAHID AFRIDI and his foundation
Ø Other reputed NGOs like Silani Welfare, JDC might also join
Ø Islamization of Pakistan’s economy under supervision of Justice ( R) Taqi Usmani and Mufti Muneeb ur Rehman
Ø Thinker’s Forum Pakistan has the competent, patriotic and sincere members who could also be part of this movement
Ø Retired government officials in including retired armed forces personnel who are free and do not have their family’s responsibilities might become part of EDUCATION MOVEMENT and voluntarily educate in poor areas.
Ø SAVE PAKISTAN ECONOMY FROM INTEREST BURDEN SAVE PAKISTAN