The budget was announced by Dr. Hafeez Sheikh in the national assembly on June 3, 2011. Mainly, I object on three points that are written below.
According to me, the policy presented to Pakistan by IMF was a total failure. Its strategy was to eliminate inflation by not increasing tax and removing subsidies. Instead of a decrease in inflation, it rose to 14.1 percent. IMF’s policy perished the country’s growth. Poverty and unemployment is increased because of it.
The second aspect is that Rs. 2500 billion are wasted on the public sector enterprises-the black holes of the country. The government claimed that it would introduce corporate governors this year, but nothing of that sort happened.
The third point is the country’s loan that has increased from Rs.6000 billion to Rs. 11.2 thousand billion. Even if I calculate and deduct Rs. 1200 billion as the loans’ devaluation and say that Rs. 1500 billion has been spent on the development sector-what I don’t understand is where the large amount of Rs. 2500 billion vanished? It hasn’t been spent on the country’s development which means it has been dissipated.
The fourth matter is that I have not seen a strategy that will recover the decrease in Pakistan’s savings rate which is the main reason that increases the country’s growth.
Basically, there isn’t a strategy in this budget that will eliminate debt and increase growth in the manufacturing and agricultural which is necessary at the moment. I do not see any incentive being taken place.
Pakistan’s core problem, as I have mentioned in one of my articles, is its expenditure persisting more than its earnings. And to complete its expenditure’s the country beseeches the Western world for aid.
No one in this country is ready to levy tax nor does anyone want to pay it. No new tax has been levied on any of the sectors of the country; the rich haven’t been taxed nor the capital gain, wealth, inheritance, or the gifts.
Another problem is that we claim that our current account of balance payments is in surplus. That is because of the exports-that have increased in price not in quantity- and the remittances.
There are two other things in balance of payments known as, the financial and capital account which is in a terrible condition at the moment.
Now, what happens is that currency produced in the State Bank causes high inflationary or it is transferred to commercial banks and there it sweeps the credit. That results to no credit left in the private sector.
Therefore, the financial and capital account is doomed because there isn’t any loan to be generated in it. This account is created of loans and foreign direct investment. The foreign direct investment has decreased from Rs. 8.4 billion to Rs. 1.2 billion.
Pakistan’s economy lacks structural need. If the balance of payments slightly moves, the value of the rupee will collapse and become a burden.
Inflation cannot be exported. It troubles the poor and those who save, and benefits the rich and loaners. Another cause of inflation besides this is the subsidy. Generally, I am not against subsidies, but I do say that they should only be for the poor.
I have been saying this for the past three, four days that all the political parties of Pakistan have to come together like they did for the 18th amendment. They must unite once and for all, and decide the reforms need to be implemented for the betterment of the country. They must conclude how to strengthen the country’s relation with its neighbours. The leaders need to determine how to establish better ties with the neighbouring countries. They need to figure out how to improve the economy of the country and how to provide the basic utilities to their people. Once they plan this collectively, Pakistan will progress.