Miftah Ismail
Former finance minister

Pakistan used to be the richest country in South Asia. Today, it is near the bottom, with India, Bangladesh, and Sri Lanka far ahead. Our government’s tax and expenditure policies haven’t catered to our people’s economic welfare for decades. But then, neither have our education, health, or other policies. Therefore, we need to fundamentally change our governance. This budget, the first for the new government, was a chance to alter the course of our downward trajectory. In that, it has failed.

The budget is good for governments and legislators. National Assembly members get Rs75bn worth of new projects, legislators in provinces are likely to get upwards of Rs300bn, and federal and provincial governments get to spend Rs3.8tr in so-called development spending. And we pay for their bonanza with taxes on infant formula and packaged milk and increased taxes on salaried employees — by the same amount, whether you are making Rs500,000 or Rs2m a month!

While salaried employees and the middle-class are being squeezed, there isn’t any belt tightening by the government. In a display of its priorities, the government has imposed taxes on books, stationary, and heart stents while increasing its current expenditures, net of debt servicing, by 24pc.

Mosharraf Zaidi
Founding partner, Tabadlab

Even in the age of populism, budgets remain the most profound expression of politics and political will. What adjectives can aptly describe the politics and political will expressed in the FY25 budget that this government has just announced? Farcical may be too harsh. Every year, the federal PSDP (the portfolio of “development” or capital investments the government intends to make) is a large and unrealistic number. And every year, the actual money spent under the PSDP is tens, nay, hundreds of billions less than what is allocated. The PML-N government allocated Rs975bn for the federal PSDP last year. Actual spend was barely Rs400bn. So what did the same PML-N government do in this budget? It ramped up the PSDP to a dizzying Rs1,400bn.

Daronomics has been firmly entrenched since last year — and the caretaker government doubled down on key pillars of the Dar approach to economic management. Muhammad Aurangzeb has made a brave attempt to lead reform, and shoulder responsibility — but the visible hand of Dar has stymied him on both fronts. The result is a nothingburger of a budget. This, apparently is how Pakistan does fiscal consolidation. Some set piece favourites are back: exemptions have been removed (they’ll roll over on this), BISP has been given a higher allocation (it should be even higher) and government employees, civil servants and government pensioners have been upgraded on flight never-ending-gravy-train.

SalIm Raza
Former SBP governor

Commentary following the budget has been mixed. Penalties on non-filers, such as restriction of travel without an NTN, the widening of digitisation of all payments, and charging some ‘holy cows’, e.g. exporters, have generally been welcomed. Criticism has centred around intensifying business-as-usual practices, i.e. tax increases for the salaried class and continual extension of unavoidable sales taxes, this time also to include food items — without really stretching the net to capture hitherto largely ‘escaped’ income, such as on the wholesale and retail trades, agriculture income and the profit of property developers.

Relying mainly on the banking system to finance some Rs 5tr of the FY25 budget deficit, when the banks already have around 55pc of their loanable assets in government securities, further impinges on potential credit for the private sector. However, the budget simply estimates what can be collected within 12 months. The scope for raising funds is hemmed in by what a given political framework is thought to be able to allow — without breaking unstated but implicit political and social understandings. Practices will only change following political unanimity on preconditions to sustainable economic growth — where there has been a historical reluctance to grasp the nettle.

Khalid Khokhar
President,........

© Dawn Business