EDITORIAL: It is becoming increasingly clear that our rulers are either still oblivious to the extent of the economic crisis we face, or are intentionally bent upon ignoring it.
How else to explain the mind-boggling profligacy in government spending, which resulted in parliament retrospectively approving a record Rs 9.4 trillion in supplementary grants as expenditure overruns, nearly five times more than the previous year’s amount of Rs 1.91 trillion, a whopping percentage increase of 389 percent.
All the tall claims about initiating austerity measures and cutting down on excessive government expenditure clearly lie in tatters as documents released by the finance ministry reveal that almost 86 percent of the expenditure overruns were recorded in only the last 45 days of FY2022-23, when the erstwhile PDM government – made up of largely the same parties that are now in power – was still ruling the country. So any attempts to place blame on the caretaker authorities alone for this outlandish extravagance won’t hold water.
Even more disturbingly, the supplementary grants for the just ended fiscal year have only been recorded till May 17 – amounting to Rs 1.3 trillion – which means that the spending overruns for the last 45 days of FY2023-24 remain undisclosed and will only come to light at the end of the present fiscal year, and look set to be even higher than the current levels that have just been revealed.
While a substantial portion of this spending resulted due to the government needing to borrow Rs 6.55 trillion to repay and service domestic debt, and another Rs 214 billion went for foreign debt servicing, a picture has emerged of various areas of the economy exceeding their budgetary allocations, including the power sector, the water resources division, defence services and civil armed forces, among others.
This trend of government departments routinely overrunning their budgets demonstrates the systemic disregard for principles of fiscal responsibility that pervades official quarters.
What is equally, if not more, upsetting, however, is the persistent inclination of the authorities to incur entirely avoidable and outright reckless expenditures, best exemplified by the Prime Minister’s Office obtaining two supplementary grants totalling Rs 81 million meant solely as stipends for its staff, while considerable sums have also been approved for maintaining residences of judges.
The finance minister’s contention that Pakistan will need to repeatedly return to the IMF if it doesn’t increase its tax revenue – even as the government has passed a budget that does not go far enough in taxing untaxed and under-taxed segments – while valid, only gives a partial solution to the crisis we face.
As has been argued in this space before, equally critical is the need for the government to alter its lavish spending patterns, especially since its expenditure is largely financed through borrowing, contributing to the worsening debt burden and exacerbating the economic crunch.
One should note that all the promises of shutting down poorly performing government entities – as has been the case with the prime minister committing to winding up the Public Works Department (PWD) – in a bid to control needless government spending end up sounding hollow, considering the failure to exercise fiscal discipline in other critical areas.
Even in the case of the PWD, where the reason behind its winding up has been given as “poor performance and corruption”, 7,000 of its employees have been placed in the surplus pool by the Establishment Division, meaning that they will continue to draw salaries and pensions upon retirement, augmenting the country’s economic burden.
The fact of the matter is that there will be no economic turnaround unless the culture of profligacy permeating the halls of government is eliminated, genuine austerity measures targeting the ruling elite are implemented, and meaningful steps to address the problem of overstaffed departments are taken. Leaving the public to suffer the consequences of lavish government spending will only deepen the economic crisis.
Copyright Business Recorder, 2024
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