The excitement, the nervousness, the fears that keep the economics establishment busy in and around June every year may soon be over, if plans to introduce 3-year budgetary system are approved by the parliament.
The proposal, which is termed Medium Term Budgetary Framework (MTBF) by the Cabinet, interestingly comes about a month after the Indian Finance Commission gave a recommendation to switch over to three-yearly budget.
Unlike the Indian proposal, which was shelved just weeks after it was introduced, its yet unclear whether the MTBF is a three-year binding budget or a rolling one. Hopefully, its the latter, so the government can better respond to unanticipated events, like economic booms, busts and so forth, by making slight changes each year.
Three-year budgets may offer a great number of benefits.
For once, the anxiety that grips companies may end - helping entrepreneurs to estimate and chalk out their financial strategy well in advance.
It would also help improve the quality of government expenditure by saving its time as well as a great deal of money spent in the budget making process. In turn, it would also arrest speculation by businesses that spend a lot of time tracking and lobbying for changes in the budget every year.
A three-year plan also forces ministries and departments to think over a longer time-frame and provides them a better perspective of their spending patterns - and thus be more realistic in making demands for funds allocation.
But this is all too good to be true for Pakistan.
Ashraf Janjua, former deputy governor SBP, argues that unless reliable data is available, how can the government make three-year forecasts. "Haven we learned anything from the fate of five-year plans," Janjua points out.
Plus, for an economy that relies heavily on foreign savings (be it foreign loans or investments), three-year budgets will potentially face a lot of teething problems.
And these problems can be quite painful, considering the hyper state of changes in global economy, such as volleying world commodity prices, and the fact that farming taxes will be rolled out soon - a subject fraught with complications to be dealt with by relatively ill-equipped provincial governments.
Making three-year-long commitments may also prove difficult because of historically proven inconsistencies both in the budgets and in the government preparing them. Even a quick look at Pakistans chequered history reveals two most obvious things: a) the frequent number of post budget changes, such as PSDP cuts this year, and b) the game of musical chairs in the federal capital. Clearly, political stability is the key to reap the fruits of such long term planning.
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