“This is exactly the budget that one can expect under the IMF program,” says Sajid Amin; Ali Hasnain calls the relatively disciplined budget but within the status quo.
On Tuesday, in a quite noisy national assembly session, the Minister of Finance, Muhammad Aurengzeb, presented the budget for fiscal year 2025-2026, with a total disbursement of RS17,573 billion and an ambitious growth target of 4.2 percent.
In his speech, Aurengzeb said that the budget was being presented in a “historical moment”, referring to the recent climbing of Pakistan-India. He emphasized the need to guarantee the country’s financial security in the same way that national sovereignty was protected.
“Pakistan has achieved economic stability and is moving towards a Pakistan who is prosperous,” he said.
Dawn.com He arrived at the main economists and analysts for their key conclusions of the budget. This is what they had to say:
‘An anomaly’
Economist Adil Nakhoda said the government had reduced its disbursement for the current fiscal year, which, according to him, was an anomaly. “This is probably due to the significant decrease in interest payments, since the government’s debt, since a percentage of the gross domestic product has also decreased,” he said.
He pointed out that the increase in defense expenses was also anticipated.
“Tax collection is expected to increase. This should arise through an increase in the size of the fiscal network instead of increasing the burden of those already in the fiscal network,” Nakhoda said.
He added that the main characteristic of the budget was the government’s plan to undertake tariff rationalization. “Although tariff cuts have been announced, the important task is to ensure that they are not replaced by anti -dumping tasks and compensatory tasks to guarantee better transparency in the process.”
‘Less structural and bold reforms’
Highlighting the positive aspects of the budget, the macroeconomist Sajid Amin Javed said that the rationalization of the tariff regime was a sign of opening the economy and pushing the industry to modernize and innovate. “Bringing customs and other tasks to zero in the next four to five years is a good policy address.”
The simplification of taxes, he said, was a very important aspect, since the presentation of taxes in Pakistan was complicated for laity. “Another good thing is to eliminate the category of non -filter.”
On the other hand, Amin said that at a strategic level, “this is exactly the budget one can expect under the International Monetary Fund,” aimed at stabilization and compliance with income objectives.
“Most policy measures regarding taxes revolve around the revenue objectives of the meeting,” he said. “I feel that this is an attempt to correct the existing system in bits and pieces, but the largest reforms that are often discussed, such as bringing wholesalers and retailers, and agriculture to the fiscal network, it was not said much.”
The macroeconomist emphasized that no structural reforms were observed, which were very necessary to increase the tax base. “In general, it seems that the budget is silent about structural reforms. Even relief, I think, is expected under the IMF program.”
He also highlighted some contradictions in the budget. “On the other hand, we are saying that we want to formalize the economy and increase financial inclusion, but we have increased taxes to withdraw money from banks for non -filtering from 0.6pc to 1 percent, which I think can discourage financial inclusion.”
“In general, I think the budget falls short in structural and bold reforms; it is a stabilization budget formed to meet the income objectives. One more thing that I am seeing is that the objective or principle that guides the budget is the stretch of the incoming IMF.
“There is no improper relief. There is an attempt to balance fiscal discipline,” Amin added.
‘Quite little notable’
The political economist Uzair Younga believed that the budget was quite noticeable, and that “maybe it can be the best of it.”
“This is because what is needed at this time is that the government maintains a uniform keel and does not yield to the historical tendency to generate growth through fiscal expansion,” he said.
“However, at the same time, the budget exercise could have taken advantage of as an opportunity to indicate a change in the strategy. For those who have reforms, perhaps the commercial and rationalization program proposed will be sufficient in the coming months,” added Youus.
‘Out -place priorities’
“There are some positive news: fiscal consolidation,” said Ali Hasanain, associate professor of Economics at Lums. “We have significantly reduced the budget deficit, and we have made a primary budget surplus, which means that our expenses for this year were lower than income.”
“Our debt profile will improve over time. I think we have already seen better debt maturities in the last year, and we will see that general interest payments have decreased. In general, the debt is moving towards stabilization and we are not in a debt crisis as bad as before.”
He pointed out that the great seen changes could be considered more as an accounting discipline instead of structural reforms, “which means that we have reduced expenses in development spending and reduce subsidies.” While structural changes were missing, there was emphasis on discipline in spending, which Hasanain said it was good and bad.
“Thirdly, our developing expense continues to seem distorted priorities. For example, 30 % of development expenses is on transport and 5pc-6pc in education, which shows that it is following an old development plan and its priorities are out of place.”
Speaking about the reduced tax bill for the real estate sector, he said it was against the advice grain of most economists and international institutions such as the IMF and the World Bank. “It fosters speculative investments and does not improve the image of the external sector.”
In addition, national tariff policy saw some serious tariff reductions, said Hasanain. He explained that Pakistan, during the last decade, had substantially increased his protection of certain industries, such as automatic and mobile manufacturing. The raw material for these industries was imported in cheap rates, and the final good was imported in expensive rates. “This type of industry is a path to anywhere because it does not make you competitive worldwide, or increase exports.”
When commenting on the general budget, he said it was relatively disciplined but within the status quo and political limitations. “I think that structural reforms and a serious reform agenda have not manifested. When that happens, the change would be seen in several areas.
“If you really want to transform the country, you must do rethinking how the country is governed,” he added.
