Finance Minister Ishaq Dar is scheduled to announce the budget proposals this Friday. He last announced the budget in 2017 for fiscal year 2018. Dr Miftah Ismail, his fellow party member who is now at odds, announced it the following year.
Since then, the five subsequent budget speeches (after Friday) will have been delivered by four different finance ministers. Talk about consistency in economic policies.
While the policies remain inconsistent, there is a certain pattern to how the budget speeches go. Here is a (non-AI) prediction of how Dar is likely to address the floor on Friday.
‘Inherited broken economy’
After the salutations, Dar will say that his party, the Pakistan Muslim League-Nawaz (PML-N), “inherited” a broken economy in April 2022. Policymakers love the word inherited (maybe because there is no tax on it). Dar said a similar thing back when PML-N took over from the Pakistan Peoples Party. Anyway.
Dar will then spice it up by blaming Imran Khan for not having followed diligently on the International Monetary Fund (IMF) deal, and say that Pakistan was at a crossroads because of PTI’s failed economic policies. He is likely to mention the unsustainable subsidy on fuel products the PTI government announced right before the no-confidence motion, and how the PML-N sacrificed political capital for the sake of the country.
He will likely take credit for Pakistan having averted a default, using “we” at this time and ignoring Ismail was the finance minister when the IMF deal was revived, albeit for just two reviews. For context, the default talk was real back when PML-N assumed power, and it helped avert it, according to the political party.
The default talk has again become the buzz of markets, but Dar is now likely to shrug this off, and pin this on “those who want the country to fail”.
Just for context: the ninth review of the IMF’s bailout programme has been pending since November, all the while Dar has been at the finance ministry’s seat. Default talk usually gathers pace when the IMF deal becomes uncertain. The topic of default is itself a detailed one, but that’s a discussion for another day.
Dar will definitely mention PricewaterhouseCoopers, citing how the firm predicted Pakistan’s “growth trajectory” the last time PML-N was in power (through votes, not vote of no-confidence), and how the country is now struggling.
PSX and the 2016 bull run
The Pakistan Stock Exchange (PSX) is also likely to be mentioned, and its bull run in 2016-17 will be highlighted. Since then, the KSE-100 Index has retreated nearly 20%, and Dar will use this to make the case of how the economy was ruined.
On the PSX’s market cap, Dar will probably mention the figure of nearly $100 billion back then to $22 billion it is now.
Inflation and key policy rate during 2013-2018, and not 2022-23
The finance minister will also emphasise how inflation was around 6-8% when PML-N was running fiscal affairs (2013-2018) to where Imran Khan-led PTI left it last year
Headline inflation currently stands at a record (a record is not a good thing here) high of 38%, and last 11 months’ average is at a whopping 29.2%. The key policy rate, which Dar will say was at 6-7% during PML-N’s tenure, is now at 21%.
While I will not go ahead and make predictions on the actual budget proposals – largely since the government is still contemplating and finalising those – contents of his speech are likely to follow a pattern.
Around 50-60% of his time will be spent highlighting the PML-N’s performance during 2013-2018 (there is very little to show off during its 14 months since April 2022), while another 20-30% will be spent on the so-called ‘relief’ measures his government intends to take ahead of the general elections (likely to be held in October) to ‘get’ back its lost political capital.
And this is where I am stumped but maybe hopeful also, the little bit of the time left will be spent discussing actual economy-stabilisation proposals.
Hopefully, these will include bringing in untaxed sectors into the revenue ambit, measures that actually encourage exports and their proceeds into the formal banking sector (inside Pakistan), and reducing the undue burden on Pakistan’s citizenry that is paying the price of not just past errors, but actively carrying on its shoulders the weight of current blunders as well.
PS: This came as an afterthought, but Dar is also likely to attribute the tough measures (read: measures that are likely to irk the public) the current government took, or will take, to the IMF deal the previous PTI government agreed to.