SINCE 2022, the installed government has imposed, under the watch of the IMF, a crushing burden on ordinary Pakistanis via austerity policy. A large fiscal adjustment has been carved out through massive taxation and cuts in subsidies instead of any hint of restraint in spending by the government either on itself or on its constituents and backers. On the contrary, the spending valves have been opened like never before. Discretionary expenditure has skyrocketed, much of it ‘pork barrel’ in nature, with public funds being lavishly used for patronage and cementing loyalties towards the making of a new political order.

In the process, the entire burden of adjustment has been placed on ordinary Pakistanis and tax-compliant firms. As a result, the country is experiencing permanent economic ‘scarring’, with businesses shutting down, unemployment surging, and nearly one out of every two Pakistanis now estimated to be below the poverty line. Even the country’s farmers have not been spared, with rural poverty now estimated to be significantly higher than the rest of the country. Worse, the IMF’s orthodoxy is set to consign Pakistan to a low-growth trap for years.

An examination of public finances since 2022 is revealing. A cumulative fiscal adjustment of 5.5 per cent of GDP has taken place, the largest over a similar period in Pakistan’s history. Much of this adjustment has come from new taxation measures. The government has imposed taxes and levies totalling over Rs50.4 trillion since 2022-23 (including federal as well as provincial taxes and the........

© Dawn