Aurengzeb’s optimism was not shared by many who have repeatedly seen enthusiastic reforms sacrificed at the altar of political convenience.
The economic survey for fiscal year 2025 perfectly encapsulates the dichotomy of “half full or half -empty glass” analogy.
Was there real growth in the outgoing financial year, or the perpetually wobbly economy failed to change the course? The survey has affirmative answers for both questions, so it is really a matter of the indicators that a person wants to weigh more.
Macro foundations have improved considerably. The head of the inflation of the consumer price index has decreased drastically, the balance of the current account is expected to be in surplus, the fiscal deficit is invoiced to decrease to 5.5PC of GDP from the last five years.
These are the goods that have also been recognized by the IMF, other multilateral lenders and global economic agencies.
But, there is evil.
Economic growth is slow, agriculture and large industry are in serious problems, exports do not increase the rapid and large parts of the economy that still operate in the shadows and the tax burden remains unequal, with increasingly squeezed being squeezed from the wage class and the corporate sector.
The press conference of the Minister of Finance Muhammad Aurengzeb on Monday showed that it was focusing on the goods. “We needed to fundamentally change the DNA of the economy, and for that, we needed structural reforms that are elusive in this country,” said the minister, hinting at failed past efforts to undertake critical economic reforms.
“We must resist the ‘Sugar Rush. The last thing we want is to go through another round of boom and bust cycles,” said the minister.
Fiscal load balance
The minister’s optimism was not shared by many who have repeatedly seen enthusiastic reforms sacrificed at the altar of political convenience.
Economic experts wonder if the next budget, which will be announced today, would be different from the previous ones.
Would a basis for structural change sit? Will there be serious efforts to expand the tax base by attacking the non -gestures and tax sectors to reduce the fiscal deficit? Will reforms be needed to increase exports?
Abdul Aleem, executive director of the Chamber of Commerce and Industry of Foreign Investors, said that the salaried class and the corporate sector have assumed a “disproportionate part of the tax burden for too long.”
“He is giving a great drag on investment, exports and economic growth,” he told Sunrise last week.
“Enough is enough. This cannot continue. Something has to give,” he said about disproportionate taxes.
According to Mr. Aleem, government spending is increasing, particularly defense. To meet this growing need for money, the fiscal structure would have to be reviewed to download pressure on the taxpayers they meet. This implies that tax rates for sectors that assume excessive income load would be reduced, and for those who do not pay according to their size in the economy, they increased.
At first glance, this measure must provide relief to the salaried class and the corporate sector for which they have been imploring. However, many suspect government intentions and consider that it is a ploy not to touch the powerful halls with political influence.
The extension of the fiscal network is also crucial for the government to build infrastructure for future growth.
The allocation for public sector development projects as a relationship of the size of the economy is being reduced every year to contain the fiscal deficit.
This means that the government is spending less and less on the socio -economic benefits of people.
If the development expenditure was not reduced, the average fiscal deficit could have exceeded 10 percent of GDP in the last five years, an economist said.
Industrial reforms
Fair taxes are not the only demand that the government would have to address in the next budget.
The industry is also asking for measures so that the manufacturing sector is competitive to compete in international markets.
According to Gohar Ijaz, an industrialist, a “constant export and industrial policy of 5 years” is essential to revive the sector. “Investors need predictability; the economy needs direction,” wrote the former Minister of Commerce of caregivers in a social media post.
He also asked to eliminate what he called as a bias in the export facilitation scheme against the national value chain.
The government has a very tight fiscal rope to walk. Can anyone assume that the balance of the demands of relief of the IMF of the sustainability of the debt without structural fiscal reforms?
Posted in Dawn, June 10, 2025
Image of heading: A worker organizes tomato boxes in a market in Lahore on June 9, 2025. – Arif Ali/AFP
