Daily Times

If not for professional compulsions, I would rather be at the golf course than sitting anxiously in front of the idiot box listening to the budget speech trying to figure out how much more of my hard earned money the government intends to abduct from my pocket. Why? Well, because I unfortunately have figured out that anytime the government intends to spend more money, either on itself or supposedly for my benefit, I will end up paying twice as much, considering that almost 85% of our taxes are indirect and regressive in nature, than contrary to what the government might harp about, even the poorest are also paying taxes.

After 60 years, and numerous military dictators, the nation’s total debt and liabilities stood at Rs 6.7 trillion at 30th June 2008; less than nine democratic years later, at the end of 31st March 2017, the nation’s total debt and liabilities stand at Rs 23.9 trillion. I can assure you, our future generations will not have very kind words for us, in fact the words they will use cannot be published in a family publication.

According to this year’s Budget Brief, approximately Rs 2.2 trillion of taxpayer’s money, roughly 85 percent of revenue receipts retained by the Federal Government was expended on debt servicing; interest and principal. Debt servicing, for the record, is the largest line item in Budgeted expenditure and is roughly twice the size of Defence expenditure. And now comes the fun part. Next year, the government on an overall basis, plans to spend Rs 262 billion more than it spent this year; and here is why it gets confusing. The size of Federal PSDP alone has been budgeted to increase by around Rs 282 billion over last year; get the implication? On the face of it, it would appear that perhaps the government is planning to practice austerity; but there are too many anomalies.

A 10 percent increment on higher public sector salaries alone may result in an additional outlay of over Rs 50 billion. Defence expenditure is projected to go up by Rs 60 billion next year. Subsidy to WAPDA is planned at the amount comparable with last year of roughly Rs 102.5 billion. K-Electric will get the same amount of subsidy of Rs 15.5 billion as last year. It is envisaged that the Government will have to subsidize a higher loss next year in the case of Pakistan Railways of Rs 40 billion compared with Rs 37 billion this year. And finally Grants and Transfers to Provinces and Other, not entirely clear what for, are estimated to increase by almost Rs 50 billion next year.

And that was the lighter side!Inflation which was four percent this year is expected to be higher in the coming months; which effectively means that all general expenditure, even if kept at the same levels will cost more. And with continuously declining exports, defending the rupee will not be a walk in the park for the Central Bank; perhaps the reason why foreign exchange reserves are not discussed any more. Finally there is the genie of the circular debt, which can potentially become an even bigger nuisance, if international pundits are right and oil prices go up by even 20 percent.

With continuously declining exports, keeping the Rupee at its current value will be tough for the Central Bank

After a more detailed study of the Budget Brief, it finally transpired that the government estimates its debt servicing to go down considerably to balance the budget. But the math might not add up! In absolute terms Government’s debt obligation has gone up by Rs 1.2 trillion over the first nine months of this fiscal year; with higher inflation it will be difficult to retain the policy rate at current level; and growing current account deficit will put pressure on the rupee. But obviously the government knows something that we don’t know.

On a serious note, somewhere in the budget speech there was a gem, “In order to facilitate the farmers in obtaining credit from banks, the State Bank of Pakistan shall take steps to align the banking system with the Land Record Management Information System for mortgaging of a property by the banks/farmers. Use of these automated records will help farmers in obtaining credit”.

I am pretty sure that this has not featured in any analysis, but if this initiative can unlock the immense capital stuck up in agricultural lands, this will boost economic growth. If only the government takes it seriously and as a next step takes positive action to rid the nation of the perils of Dewani courts. One out of the three steps to growth.

I realise that the lighter side of the budget is more serious than the budget itself. A statement which is self-explanatory and worrisome at the same time.

Albeit, why worry? Ordinary voters, contrary to what the theory says, can do absolutely nothing, even in the case of the lighter side of the budget; worse, they will eventually end up paying for all government expenditure, directly or indirectly, and can do absolutely nothing about that too! Hence, no point in missing golf!

The writer is a chartered accountant based in Islamabad. He can be reached at syed . bakhtiyarkazmi@gmail. com and on Twitter @leaccountant