Financial hara-kiri
ther instances of financial hara-kiri in the last two weeks of the present regime the impact of which will continue to haunt the economy in the years to come.
The reckless doling out of the country’s financial resources and jobs and the arbitrary appointments of ineligible people to key institutions including financial ones are unprecedented in magnitude. The extent of financial damage in the shape of power sector subsidies, bailout packages for the rotten PSEs, BISP, circular debt, etc will not be fully known until several months have passed after the exit of the present regime.
A race has begun between the federal and provincial governments to implement senseless policies. Recent examples include abolishing the condition of having a National Tax Number (NTN) to purchase a new car – a move, which is contrary to the rhetoric of broadening the tax base; appointing unqualified people in the board of directors of the State Bank of Pakistan (SBP); making hundreds of thousands of contractual employees permanent; and giving hundreds of thousands rupees interest free to the so-called youth.
The planning commission has become a hub for ministers and key parliamentarians, as they are seen moving around on different floors seeking approval for their projects and release of funds. The deputy chairman of the planning commission is obliging them.
Doling out resources in such a fashion in the name of bestowing benefits to the people of Pakistan at the fag end of the tenure is shameful. Can the exchequer of this poor nation afford to bear the burden of such reckless spending? They are destroying the country’s finances for ‘winning’ elections and even if they ‘win’, there will be hardly anything left to govern. The only available source of funding would be the printing machine to ‘print’ local currency. Is this what we are waiting for?
A government that indulges in reckless spending in the name of helping the people at the end of its tenure is acknowledging its own failure. Since its leaders have failed to deliver during their tenure, they are attempting to curry favour by securing votes through reckless spending in the last few days of the government’s term. This is nothing short of an admission of a grand failure. What will be the consequences of this financial hara-kiri for the budget deficit of the ongoing fiscal year? The present regime inherited a budget deficit of 7.4 percent of GDP in 2007-08. They would certainly leave the government by making a much bigger hole in the budget 2012-13 – an unprecedented void in Pakistan’s fiscal history.
In my article printed on September 25, 2012, I analysed budget 2012-13 in greater depth. In my view the budget was prepared in a casual manner with fragile numbers. The budget makers were not serious; did not do their homework, and simply tried to put together irrelevant numbers in a hurry.
It was clear that the budget for 2012-13