The budget presented by Naveed Qamar on June 11t needs to be dissected and analysed in the context of the positions adopted by the respective coalition partners of the government post-February 18. Those among us expecting the current polarization to dilute and good governance to become the order of the day have had a rude awakening.
That how much of real delivery the new political dispensation has been able to offer to the people can be gauged by the steep nosedive the economy has witnessed since the last few months. The first budget of this government was therefore eagerly awaited by all segments of the population in the hope it would bring them the much the promised “true democracy”.
The finance minister, no doubt a gentle soul, had his day in the sun on the June 11. Frankly I was hoping, having known Naveed Qamar for years, that it would be an objective, innovative and professional presentation. But my optimism did not last too long as the finance minister found it hard to rise above political prejudices and conveniently shifted all the blame of the poor state of the economy to his predecessors.
Let us begin by understanding the finance minister’s orchestrated tirade against the outgoing PML government. He said that the economy had been destroyed and that the new government would have to undertake serious effort to put it back on track. It certainly comes as a surprise that in his over-exuberance and fond eagerness to criticise his predecessors he forgot that he was presenting a budget of over two trillion rupees and projected revenue of around Rs1.25 trillion rupees. The size of the budget was 20 per cent higher than that of last year and the project revenue amount was almost 25 per cent higher than collection for 2007-8. The record size of the 2008-09 budget is in itself an acknowledgment of the strength of the economy founded on a strong revenue base. Destroyed economies don’t have such high rates of growth in revenue collection.
This whole business of blaming the previous government has been the hallmark of the new democratic era post-Feb 18. Some highly irresponsible statements from the top economic managers have played havoc with the country’s capital markets which from being one of the best performing markets in Nov/Dec 2007 as rated by Credit Suisse turned into the worst performing as of May 2008. Accusations of fudging national macroeconomic figures and indicators were made without any substantiation and this served only to embarrass the country in the eyes of the World Bank, IMF and other leading financial institutions.
Let’s take a closer look at the facts and figures as they relate to the economy. In the last few months Pakistan’s debt rating has been downgraded – which is an indication of a crisis of confidence. Moreover, there seems to be a distinct lack of economic leadership. In Oct/Nov 2007, foreign exchange reserves stood at $16.5 billion – today they are $10 billion, and fast depleting. As for the rate of GDP growth, in 2005-06 the economy grew at a record nine per cent – second only to China. In fact, the average growth rate for the past eight years was a solid seven per cent, surpassing that of many developed economies.
While analysing growth figures one must keep in mind the primary baseline upon which respective growth levels are measured. That then portrays the actual and real national growth registered annually and the fast ballooning size of the economy. As evident from the above figures which incidentally also are mentioned in the Economic Survey for 2007-08 unveiled by the foreign minister a day before the budget, and despite the organised damage and inept management of the last three months, there is evidence to prove the vibrancy of the economy during the last government’s tenure.
One other major casualty of the present economic mismanagement has been the rupee, which throughout the last eight years was at the Rs60 to a dollar mark. Now it stands at around Rs70 to the dollar. The economy of a country, including the value of its currency and the performance of its stock exchanges are linked with the overall policy environment. This depends on consistency of policies. The transition is now over and time is fast running out for this government to set its house in order.
There is an urgent need to come out clearly on key policy issues. No one really knows who is in charge and if this perception is not arrested immediately an economic meltdown would happen in the foreseeable future. The finance minister’s major challenge remains how to instill the now-elusive confidence among all stakeholders in the economy.
The writer is the parliamentary leader of the PML-Q in the National Assembly. Email: email@example.com
Source: The News, 28/6/2008