Daily Times

The Budget 2021-22 has been by far the most contested topic of the year, with Finance Minister Shaukat Tarin hailing its as “growth-focused. He seemingly had the support of the business sector, which welcomed it as “business-friendly”. Although it has not, of course, all been smooth sailing with certain quarters denouncing the fiscal package as “fragile”. The opposition felt triumphant before the announcement since they expected the administration to suffer a failure to launch moment. Since then, critics have begun to speculate about a difficult FY 2021-22, warning of higher inflation, price hikes, and a loss of national assets.

Let’s take a look at some of the lofty goals earmarked for FY 2021-22, which will serve as the premise for this article. Targets include: growth rate of 4.8; tax revenue target of Rs 5.829 trillion; non-tax revenue collection of Rs 2.08 trillion; and remittances and Remittances will shoot up to $31.3 billion. Of course, the sceptics still want to know the details of how the government will meet these goals. The proof is in the pudding. Meaning that no one had expected the PTI government to revitalise the agriculture (2.77 percent), industrial (3.57 percent), and services (4.43 percent) sectors that served as the foundation for this exceptional growth.

Thus, the more pertinent questions to ask are: has the government struck the proper balance in delivering a more productive, sustainable, and inclusive economy? And what are the potential roadblocks?

Firstly, Mr Tarin has joined forces with Federal Minister for National Food Security and Research Syed Fakhar Imam to devise agricultural revival and technological transformation strategies; pooling together their respective financial and agriculture expertise. From investment in high-quality seeds, the introduction of agri-technology, dedicated attention on major crops’ production, the revival of livestock department, tax exemptions, and relief – the government has entered a new phase of launching the Agriculture Transformation Plan. The key factor is the diversion of the government’s focus on providing micro-financing opportunities to small farmers that account for 85 percent of the overall farming community, rural transformation through SMART projects, the introduction of improved farming techniques, and exploration and promotion of community, corporate and commercial farming that will put Pakistan — as a potential exporter — on the world map.

As China penetrates Afghanistan, the US and its allies will feel increasingly cornered. Based on my analysis of the situation — I would not be surprised if a war is waged against China by planted militant groups

Secondly, as the government shifts gears to drive exports and achieve an export target of USD $35 billion, the ‘Made in Pakistan’ movement will gain momentum with lower tariff duties on the export of raw material. Overall, the exports witnessed a YOY (year-over-year) growth of 61.3 percent to $2.3 billion from April 2002 to April 2021. With magnanimous export numbers from IT (58 percent), surgical instruments (17 percent growth), value-added textile (30.4 percent growth) – the government now also focuses on pharmaceutical, IT services, agriculture, leather, and other sectors to achieve a healthy trade balance.

Lastly, growth statistics, coupled with the government’s targeted reforms, Roshan Digital Account, Indus Euro Bonds, a structured approach to green and blue economies, rapid completion of CPEC projects, privatisation of the white-elephant projects, and a host of other reformative actions will have a huge role to play in achieving the GDP growth target. However, the major challenges facing us are not ‘economic’ but ‘political’ in nature. Therefore, I firmly believe that we have the right blend of reforms and strategies to lead to a productive, sustainable, and inclusive economy.

Consider the Financial Action Task Force (FATF) situation or the prolonged series of discussions with the IMF. Mr Tarin, in his latest statement, said: “The sides would definitely evolve an understanding, as the way Pakistan had chosen for sustainable growth would eventually convince the IMF.” Ever since Pakistan’s uncompromising stance against the increase in tariffs and all the telltale signs of growth, the IMF is still insisting on the need for “structural” reforms. Moving on to the FATF threat dangling over the country — the grey list ranking has been confirmed until June 2022 — as Foreign Minister Shah Mahmood Qureshi has reiterated, there is absolutely no justification for Pakistan to remain on the list. The country has successfully met 26 out of 27 FATF requirements. So, what is really going on?

As mentioned earlier, the real roadblock is Pakistan’s flat-out refusal to allow the US use of military bases, India’s resentment of our stellar economic performance. This is not to mention both Washington and New Delhi’s weakening economic position due to a rising China, particularly on the CPEC and BRI (Belt, Road Initiative). Truly unfortunate is how the opposition are unwittingly supporting the US and Indian intention to halt Pakistan’s progress, while undermining CPEC.

It is not very reassuring to note that the current budget being termed “discriminatory”. But, unfortunately, instead of coming together in the name of the national interest, the opposition’s constant internal strife is doing more harm than good. If the IMF negotiations fail or the FATF imposes additional restrictions, Pakistan will endure economic fragility.

Pakistan’s FDI (foreign direct investment plan) is clearly dependent on the success of CPEC projects. However, as China penetrates Afghanistan, the US and its allies will feel increasingly cornered. Based on my analysis of the situation — I would not be surprised if a war is waged against China by planted militant groups.

As everyone appears to have jumped on the anti-budget bandwagon, many have simply failed to understand the geo-political context; rendering budget intricacies little more than a labyrinth of meaningless figures. Therefore, in the name of the national interest and progress, we must look beyond ill political will and focus on the economic gains that the government’s reformative action plan will reap.

The writer is Special Advisor (Pakistan Institute of Management, Lahore operated under Federal Ministry of Industries and Production, Islamabad) and Foreign Research Associate (Centre of Excellence, China Pakistan Economic Corridor, Islamabad). He can be reached at hassnain.javed@hotmail.com