10212017Headline:

Budget 2016-17: a directionless heap of numbers by Abdul Q Kundi

I have been reading and watching the debate on Budget 2016-17. I can’t call myself an expert in the area but as a former President of Pakistan Chamber of Commerce-USA and head of money market fixed income in an investment bank I may seek your permission to offer my three cents.

  1. I am not aware how do we classify our economy. Is it agrarian, industrial, service oriented or a hybrid? Are we pursuing supply or demand side economics? I know we did classify ourselves as agrarian economy at the time of independence. Is it still the same after 67 years? For instance Chinese economy was classified as factory floor of the world and their budget reflected that. Now they are moving towards domestic demand oriented economy and recent changes are trying to adjust to this direction. We need to abandon this directionless approach and workout a long term structural plan which is reflected in budgetary allocations.
  2. When I was in the bank a month before budget discussions would start between Ministry of Finance and various stakeholders of the economy. I remember we used to prepare recommendations for the government and submit it to them. Off course we did not expected them to accept all of it because we had an industry bias towards financial sector. Similarly APTMA, FPCCI, KCCI, LCCI etc. etc. would prepare their own recommendations. These would be discussed in newspapers (electronic media was non-existent at that time around 1997) and a debate would ensue. I hope this approach is not abandoned but I have not seen any debate on these proposals in seminars or news reports. There seems to be a decay in institutional approach to planning and it is done more on ad hoc basis driven by politics rather than economics.
  3. Opposition as usual seems to be clueless how to address the situation. They all are more interested in TOR and other means to win in the musical chairs of power. All opposition parties knew budget session will start on June 6th. They did not start media awareness about government plans as well as prepare their own shadow budget. They act more like journalists rather than politicians.
  4. I have proposed in many oped pieces in the past that we need to change the way we look at our budget preparation to make it simpler and more effective. Our budget should be separated into two parts i.e. fixed part that relates to operating expenses of the government including salaries, pensions, maintenance, etc. etc. while the other variable part which is development budget. The debate should be on the variable part which sets direction for future economic progress while only those items brought for consideration for the fixed part that are changing for example raise in salaries or perks as well as expansion in number of government employees.
  5. Our economic data is unreliable because black economy is atleast twice as large as recorded one. This situation has to be fixed for more sustainable development.
  6. Social indicators are more important for stability of an economy than hard statistical numbers. For instance a budget should set targets for poverty alleviation; reduction in unemployment; numbers of new job creation; expansion of SME; improvement in productivity; changes in export/import mix; and bridging gaps in social indicators for affected segments like women and non-Muslims.

I have so far not seen any discussion on it. Most discussion is focused on who is getting what and how much. This is not going to solve our structural issues. Stability and growth in economy is critical for our security and progress.

What Next?

Related Articles