An Austerity Budget Amid IMF Bailout: International Media
As the incumbent government of Pakistan Tehreek-e-Insaf presented its first-ever budget for FY 19-20 amid profound austerity promises, international watchdogs and media outlets had their eyes all over it.
It does not come as a surprise that all of them linked the budget to the IMF bailout package of $6 billion which the government was able to secure last month. The Salient features which were reported internationally were mainly tax hikes as a consequence of a diminutive tax base, no increase in the defense budget and reaction of the parliamentary opposition.
Reuters in one its report on the said budget was particularly critical of the “Tiny Tax Base” of Pakistan. It presented staggering numbers which are often quoted in local news media that only 1.8 million file income tax returns in a country of 208 million, which reflects upon the existing parallel and informal economy. The government of the day still seems ambivalent about this parallelism in Pakistans economy.
Bloomberg, one of the most renowned news organization on the finance economy displayed multiple charts to reflect upon Pakistan`s ongoing economic situation.
It is important to note that the figures and data quoted by Bloomberg consisted of three main indicators. The first indicator or perhaps government`s primary agenda is the fastest ever increase in tax revenue set at 5.55 trillion rupees equivalent to $36.75 billion dollars. Another indicator also considered as “Elephant in the room” by Bloomberg is the Debt to GDP ration. The last indicator is the fiscal deficit which is recorded at highest in six years. It has to be acknowledged that Pakistan is already bringing in measures to reduce the fiscal gap and tackle the inflationary pressure.
Other news organizations including Fox News were largely privy of Imran Khan`s failure to abide by his past promises.
Indian media, as usual, was quite critical of what the budget in question entails for Pakistan Armed forces, Times of India reported,
“No change in Pakistan’s defense budget amid government’s austerity drive”
Times of India was very much particular about Pakistan`s military spending in quoting a report by Stockholm International Peace Research Institute which claimed Pakstan`s military budget at $11.4 billion.
I appreciate Pak Mil's unprecedented voluntary initiative of stringent cuts in their defence expenditures for next FY bec of our critical financial situation, despite multiple security challenges. My govt will spend this money saved on dev of merged tribal areas & Balochistan.
— Imran Khan (@ImranKhanPTI) June 4, 2019
The defense cut in the budget was already announced by the Prime Minister in one of his tweets in days leading up to the budget.
NDTV while reporting on Pakistan`s budget went ahead with ongoing review by the Finacial Action Task Force which currently holds Pakistan under the greylist. NDTV added,
“The organization will decide soon whether to add Pakistan to a blacklist that would trigger automatic sanctions, further weakening an already-faltering economy.”
The leading Indian channel quoted Pakistan`s economic woes in connection with the United States where the latter had warned against IMF bailout to be used to repay Chinese loans.
“Make no mistake, we will be watching what the IMF does”, is what Mike Pence said in an interview to CNBC prior to the $6 billion bailouts.
Financial Times while reporting on Pakistan`s budget raised some important questions regarding the government`s ability to collect the target tax revenue.
FT was able to quote personnel from diverging backgrounds including a taxi driver and an economist. Both expressed disregard towards government`s financial policies however the latter was able to explain countercyclical measures by the government.