‘Garage’ Budget 2019 After Debt Galore Over 10 Years
We can keep playing poker (budget) with chips (loans, cash advances), and shun austerity, cost cutting and revenue generation, and at the same time hide our net worth– mostly driven by fixed assets. It’s like sleeping in the elevator of a high-rise apartment building.
PKONWEB — During the PPP’s 2008-13 tenure, public debt surged from Rs6 trillion to Rs14 trillion. In the next five years of PML-N tenure, there was additional Rs10 trillion added to the accumulated debt, pushing the total debt figure to Rs24.2 trillion.
With no significant efforts to reduce spending or increase tax recoveries, or both, these loans’ interests and reduction of original loan amounts remained a far cry–it has now become an issue for the 10-month old PTI-led government– creative accounting and out-of-the-box solutions notwithstanding.
Also Read: The ‘Garage’ Budget 2019: Meant to Fix the Car With Tools Available
“The accumulation of debt is the direct result of the gap between expenditures and revenues, which is widening due to inelasticity of debt servicing and the Federal Board of Revenue’s (FBR) failure to enhance revenue collection,” wrote The Express Tribune.
The international lending institution (WB) has been pointing this out– don’t increase tax base, enhance recovery, it lately said. Also, have a second look at subsidies, it added. Both suggestions were shoved under the carpet rather being a national priority.
And keeping everything same on “business as usual” (a no-no on lenders’ table) plank, the shift at looking at defense spending first, and then debt servicing– it should have been the reverse for narrators, needs rethink.
Also Read: We as a Nation Living Beyond Our Means
Defense spending as a function of security and stability driven by (close to the borders) external factors and its extensions internally, is an unavoidable line item, unless one would consider “business as usual” sacrosanct, which appears to be so– defense directly increases or decrease with peace contours. On other hand, government expenditures having no direct correlation with these factors, has increased by same proportion over the decade. Another rethink needed.
The civilian government’s share in the federal budget 2018-19, excluding debt servicing, is 74% higher than our defense budget (including military pensions).Our Defense Budget – Facts and Fiction
Meanwhile, no additional revenue sources were added nor cost-cutting measures were populated. Yet another rethink called for.
The World Bank data shows that in the last 30 years, Pakistan’s military expenditure as percentage of GDP has come down by 50%. This rate of reduction was in fact faster than that for South Asia.Our Defense Budget – Facts and Fiction
The ballooning (in Pak Rupee) of total debt over a 10 month period included incremental amount in Pak Rupee added to it due to devaluation. This aspect should be looked at as unavoidable too, given revenue gaps.
The previous governments’ inability to enhance tax revenues, attract non-debt creating inflows and maximize tax recovery have largely contributed to the creation of revenue versus spending yawning gap. Add to it, was their inability to enlarge tax-paying community’s number and at the same time reduce the subsidies given to some not-so-well-performing economic sectors and business communities.
When looked at the overall public-sector expenditure pie (excluding debt servicing), military budget claims 1/6th of it. For every rupee spent by the military, the civilian government spends Rs4.6. Even more interestingly, this proportion was exactly the same 10 years ago, meaning that both the civilian and military budgets have grown at exactly the same rates.Our Defense Budget – Facts and Fiction
At the end of the day, public-private partnership is imminent for fiscal discipline, enhancement and management. It’s a two-lane highway we have been “China-cutting” for decades. Numbers don’t count any more. Real ones remain part of our informal economy. Bring them up, dd them up, and the actual wealth of the nation will show up– raise our esteem.
A national narrative for this has been amiss, as it would have drawn popularity poll results down and affected the electronic media’s Nielsen ratings fueling their revenue streams.
Having the cake and eating it too doesn’t work collectively.
More to follow on the budget…