EDITORIAL: If there were any doubts about whether the ruling elite realise the seriousness of the economic crisis Pakistan has been battling and what needs to be done to extricate the country from it, those were laid to rest on June 25 when the government asked for the National Assembly’s approval for a massive Rs34.6 trillion in borrowing for the next fiscal year.
This amount was part of an obligatory expenditure bill – also termed as charged expenditures in the constitution, which cannot be voted on by parliament – and is slated to meet both debt repayment and servicing needs, as well as for the running of various constitutional organs of the state.
Apart from Rs33.8 trillion apportioned for both domestic and foreign debt repayments and servicing requirements, of which Rs27.79 trillion is meant for domestic obligations and Rs6.03 trillion for foreign debt, approximately Rs710 billion is being set aside to meet the expenditures of parliament, the Supreme Court, the presidency and the Election Commission of Pakistan, among various other constitutional offices.
Shockingly, these state organs can expect to receive budgets that are 22 percent to 63 percent higher than those allocated to them during the outgoing fiscal year. While there is no getting out of fulfilling our various debt obligations, the mind boggles at the audacity of the ruling elite to expect such substantial increases in its spending to maintain its lifestyle at work while at the same time expecting the citizenry at large, especially the salaried class and the corporate sector, to continue to take on the brunt of the economic burden.
One wonders how our public office holders can expect citizens to believe their tall claims regarding the government’s efforts to control expenditures and undertake austerity measures when the facts on the ground tell a different story.
Earlier in the month, the prime minister had stated in an address to the nation that it is his government’s responsibility to curtail excessive spending wherever possible as the country’s economy demands sacrifice from the ruling class. In a similar vein, the finance minister, in the same session where he presented the above-mentioned compulsory expenditure bill, commented that measures would be taken to control expenses and impose austerity in various government departments. It is evident though that these austerity measures clearly do not extend to some of the highest offices of the state.
For example, the presidency has requested a record-high budget of Rs2.2 billion, which is 62 percent higher than what was allocated to it in FY2023-24.
There have also been substantial increases in the budgets set aside for both houses of parliament. Notably, the finance minister demonstrated the government’s generosity further by announcing stipends equivalent to three basic salaries for the entire staff of the National Assembly and the Senate during his speech.
The fact of the matter is that unless the government truly tightens its belt and brings down its various expenditures drastically, even increases in tax revenue and expansion of the tax base, while vital, will not be enough to disentangle the disarray the economy is in that needs to be addressed urgently.
It must also be noted that the spending on the items that come under charged expenditures will be financed through borrowing, which will only serve to augment the country’s already bulging debt burden, and underlines how highly irresponsible the requests for increases in budgets of various state organs really are.
While lower income groups will continue to be crushed under relentless inflation and indirect taxes in the coming fiscal year, with their spending on basic necessities already seriously constrained, the ruling elite clearly has little compunction about persisting in its extravagant ways.
Without the upper echelons overcoming this disregard for the principles of fiscal discipline, it will be over-optimistic to expect the economy to turn the corner any time soon.
Copyright Business Recorder, 2024
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