Pakistan designates 40% of budget to tackle debt
Pakistan’s finance minister Miftah Ismail (AFP)
ISLAMABAD: Pakistan’s new government, grappling with soaring inflation and political unrest, unveiled a 9.5 trillion rupee ($47 billion) budget Friday, earmarking more than 40 per cent to service the country’s enormous foreign and domestic debt.
chief Minister Shehbaz Sharif blames Pakistan’s economic woes on his predecessor Imran Khan, who was ousted by a parliamentary vote of no confidence in April and is fomenting a national campaign to press for early elections.
Analysts, however, say the problems grow out of decades of poor economic management by subsequent governments and military rulers who have failed to tackle endemic corruption and extensive tax avoidance.
The budget unveiled by finance minister Miftah Ismail Friday earmarks 3.95 trillion rupees just to service the country’s whopping debt of $128 billion.
“Because of the without of farsightedness of (the past government), social structure was destroyed, economic growth stalled, and national integration withered,” he told the national assembly.
A $6 billion IMF bailout package signed by former chief minister Khan in 2019 has never been fully implemented because his government reneged on agreements to cut or end some subsidies and to enhance revenue and tax collection.
Islamabad has so far received $3 billion, with the programme due to end later this year.
Officials are seeking an extension to the programme by to June 2023, in addition as the release of the next tranche of $1 billion.
Sharif has vowed to jumpstart the moribund economy, but analysts say his fragile government has failed to take tough decisions.
The new budget allocated 1.523 trillion rupees to the country’s defence forces, who regularly swallow huge amounts as a consequence of long-lasting tensions with neighbouring India.
About 800 billion rupees were lined up for development projects with the aim of attaining growth of five percent in the fiscal year beginning July 1.
For the outgoing fiscal year, economic growth is projected to be around six percent.
“Theoretically this is a contraction budget aimed at checking the rising inflation,” said Rashid Alam, an independent economist.
“But nearly that reflects our national priorities that tilt towards the security of the state instead of welfare of the people,” he additional.
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