Budget deficit to climb over Rs1 trn

ISLAMABAD: For the first time in the history of the Islamic Republic the difference between what the government spent over the past twelve months and what the government managed to collect will cross Rs1,000,000,000,000.

Prime Minister Syed Yusuf Raza Gilani in his first speech as prime minister had introduced a number of austerity measures: PM Secretariat’s budget will be cut by a wholesome 40 percent; all ministers will travel economy class; no minister will travel in a car of more than 1600 cc.

On 26 December 2009, PM Gilani had constituted a Special Committee to “prioritize and oversee the implementation process of the austerity measures.” On 21 December 2010, a meeting of the cabinet, presided by PM Gilani, approved “major austerity measures.”

Twelve months ago, our budget drafters had expected net revenue receipts of Rs1.37 trillion and current expenditures of Rs1.99 trillion-the budgetary deficit was set at Rs685 billion. Over the past twelve months, two things have happened: First, current expenditures at the Cabinet Division, the Prime Minister’s Secretariat and the Household Allowances of the President have all gone through the roof. Second, there has been a massive shortfall in revenue receipts.

Twelve months ago, the Government of Pakistan (GOP) and the International Monetary Fund (IMF) had agreed on a budget deficit target of around 4 percent of GDP. Over the past twelve months, the GOP has ended up spending in excess of Rs1 trillion over and above its receipts and, as a consequence, the budget deficit may have crossed 7 percent of GDP.

Figure fudging at Block Q of Pak Secretariat, according to some insiders, is now in full swing. If the wizards at the Ministry of Finance can somehow inflate the GDP the budget deficit as a percentage of the GDP will look much, much smaller than it really is. That will be the best of both worlds-we will have a swollen GDP, pumped-up per capita income and a half bearable budgetary deficit. Only if wishes were horses, beggars would ride.

At Block Q midnight oil is once again being burnt. Budget 2011-2012 is scheduled to be announced in a week’s time. Once again we will have inflated revenue receipts, a healthy developmental allocation, a constrained steam of expenses and an awfully alluring budgetary deficit. At Block Q the motto is: A life spent making mistakes is not only more honorable but more useful than a life spent making real budgets.