ISLAMABAD - The announcement of actual budgetary figures for financial year 2012-13 (FY13) on Monday has presented a clear, though gloomy, picture of the country’s economy for the first time since the coming to power of the ruling PML-N government. As expected, all false pretensions of an economic turnaround have been worn threadbare by figures that speak for themselves, offering a glimpse into what lies in store for the nation in the form of taxes, mainly regressive and anti-poor to the core.
The government estimated on June 12, when the budget for the ongoing fiscal was presented in the National Assembly, that the country’s total expenditure in FY 13 (ending on June 30 or just 18 days later) would be Rs 3,478 billion, about 300 billion more than the original estimate of Rs 3,171 billion. Based on this, the expenditure for the ongoing fiscal (FY14) was estimated at Rs 3,985 billion in what apparently seemed to be a stroke of rare genius.
Unfortunately, however, the economic wizards chose to ignore the fact that the country’s expenditure in only the first nine months of FY13 stood at Rs3,171 billion. In other words, they estimated that the country’s expenditure in the last quarter of the fiscal – when it traditionally picks up – would be only Rs307 billion or Rs102 billion a month, against an average of Rs352 billion a month in the preceding nine months.
The figures now posted on the Ministry of Finance’s website tell us in terms as unambiguous as possible that the actual expenditure in FY13 was Rs4,816 billion, or Rs1,338 billion more than what the best brains of the country had estimated just 18 days ago. These figures unequivocally tell us two other things too: one, the government estimates to spend Rs831 billion less in the ongoing fiscal that the preceding one; two, the budget deficit for FY13 stood at an unprecedented Rs1,834 billion or 8% of the country’s gross domestic product (GDP).
A budget, though most important economic document for a country, is not a scripture that cannot be changed. Governments all over the world revise budgetary estimates throughout the year to cater to unseen challenges. For example, floods or a large-scale earthquake may necessitate a genuine revision of budgetary figures in Pakistan. A government, however, has no justification to intentionally share incorrect revised estimates at the time of presentation of the next fiscal’s budget.
Pakistan’s financial year starts on July 1 and ends on June 30. As the budget for the next fiscal is usually announced in the second week of June, the government cannot possibly predict the exact budgetary figures of the ongoing fiscal since the latter is still not over. However, the revised budgetary estimates shared just three weeks before the end of a fiscal should ideally not miss the target by much, as has been the case in Pakistan for the last few years; another of Shaukat Aziz’ gift to the nation.
There has been an increasing trend to project the revised budgetary figures of the ongoing fiscal, included in the next financial year’s budget document, in a manner that they hide the government‘s inefficiency, which becomes evident only after the actual budgetary figures are released in end August. As the focus of attention has drifted from the budget by then, the government normally does not have to face much criticism from the opposition, civil society or the media.
These budgetary ‘discrepancies’ (for want of a better term) have resulted in an ongoing process where the government is forced to resort to the same practice year after year, bridging its budget deficit through bank borrowings, resulting in an increased burden on the economy and the masses in the form of interest paid.
A detailed analysis of the budgetary figures of FY13 further tells us that, as has been the norm throughout the past decade, the estimates for current expenditure were way off the mark. In the revised estimates for FY13, current expenditure was estimated at Rs2,907 billion, while its original estimate was Rs2,612 billion. With ‘fiscal discipline’ in mind, the current expenditure for FY14 was projected at Rs3,196 billion.
According to the actual budgetary figures for FY13, however, the current expenditure reached an astounding Rs3,660 billion. Now, Rs753 billion is no mean sum, especially considering that the revised estimates were prepared just 18 days before the end of the last fiscal. The variation with the original estimates comes to an even more astounding Rs1,048 billion. Seen in this light, the budget estimate of Rs3,196 billion for FY14 becomes all the more laughable. How would we be able to spend Rs464 billion less than we did last year under the head of current expenditure? While development expenditure can be reduced, by not initiating new schemes or stopping work on the ongoing ones, reducing current expenditure is almost impossible, unless we agree to close down schools or hospitals, or lay off people working in the public sector.
While the expenditure and budget deficit were underestimated, the development expenditure was overestimated even in the revised estimates, making it pretty much clear that there is a method to this madness.
In the revised estimates for FY13, development expenditure was estimated at Rs851 billion (Rs388 billion and Rs463 billion for the federal and provincial components, respectively), while its original estimate was Rs873 billion (Rs360 billion and Rs513 billion for the federal and provincial components, respectively). The actual budgetary figures show that the government could manage to spend only Rs777 billion under the head of development expenditure. Against this backdrop, the target of Rs1,155 billion for FY14 seems all the more unattainable.
One can say with certainty that the government will not be able to spare this amount for pro-people purposes, considering that it spent about Rs100 billion less than what it had earmarked for development in the last fiscal. This is also reminder to those civil society activists who campaign for increase in budget for education and other development sectors. Probably we need campaigns aimed at forcing the government to utilise the full allocation for the development sector!
On a positive note, the defence budget showed a slight decrease from both its original and revised estimates. In the revised estimates for FY13, defence expenditure was estimated at Rs570 billion, while its original estimate was Rs545 billion. Despite this increase in revised estimates, the actual budgetary figures show that only Rs541 billion were spent under the head of defence expenditure. Considering this, the estimate of Rs627 billion for FY14 seems reasonable, especially if we take into account that the defence sector also earned a profit of Rs180 billion in FY13.