Cheaper buns, expensive sheermals

Over the past one year, this column has argued that Pakistan sits on a hinge of history, a fleeting interval when macroeconomic stability, political alignment, and multilateral goodwill could finally be exchanged for meaningful reform. The finance minister’s second budget shows the state looked that moment squarely in the face and walked away.

Islamabad keeps the tea stall open through higher petroleum levies, token primary surpluses, and airy promises of transformation, but the menu remains unchanged. Buns and rusks remain the regime’s blessed staples, while sheermaal and vermicelli are suddenly priced like indulgences. It is a culinary price shuffle that captures the budget’s true character: tweak a rate to please a rent-seeker, hike a duty to plug a fiscal hole, and move on. Strategic vision is nowhere in sight.

It is not for lack of diagnosis. Commentators, including BR Research, have consistently warned that the rare alignment of low inflation, external calm, and political space must be cashed in for structural surgery.

The targets were never a mystery: widen the tax net beyond the salaried and corporate few; liquidate loss-making state firms; deregulate the energy value chain; flatten the tariff pyramid; and shrink a federal government whose net revenue cannot even cover its interest bill. Instead, the budget doubles down on the old formula: squeeze formal savers, spare speculative capital. Withholding tax on deposits climbs, while real-estate duties ease.

Solar panels, once the icon of green transition, are taxed. A carbon levy on petrol is dressed up as climate policy. Bureaucracy parades as strategy. Rhetoric stands in for resolve.

The same pattern seen in every IMF review is now replicated in the national ledger. Benchmarks are missed, waivers granted, applause all around. The budget trumpets a record primary surplus without admitting it comes from throttling growth rather than shrinking the state. It hails tariff rationalization, while customs valuation and under-invoicing remain untouched. It promises privatization, yet continues to treat each state enterprise like a hereditary relic. The gulf between speech and substance is no longer hidden, it is printed in the budget itself.

Some will defend the numbers, claiming interest payments and defense leave little room to maneuver. But fiscal space is not discovered; it is created by cutting entitlements at the top, not by taxing ghee and electricity at the bottom. The excuse that reform is politically impossible has expired. The courts are quiet, the opposition fragmented, the establishment cooperative, and bilateral partners lining up with pledges. If a government with this latitude cannot act, it never will.

BR Research also urged the Fund to stop behaving like an accountant and force the government’s hand on real reforms. But the Fund blinked, and the window closed. The home-grown plan, Uraan Pakistan, and the finance minister’s own speeches all insisted that this time would be different. None found anchorage in the budget. Instead, the state is gearing up for another credit-fueled ride, hoping commodity prices stay tame and remittances hold up. It is the same playbook that led to every previous bust.

Pakistan now stands at an intersection. Macroeconomic calm, international goodwill, and political space lie on one side. A budget that taxes savings, rewards land hoarding, and prices sheermal out of the Eid basket lies on the other. Another Manmohan Singh moment has been traded away for a cheaper bun. Policymakers may pat themselves on the back for delivering stability, but history will record that the lights were green, and they stalled. The next crisis will not be so forgiving.

Copyright Business Recorder, 2025