Pakistan allocates 40% of budget to tackle debt

Analysts say the problems stem from decades of poor economic management

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By AFP

Published: Sat 11 Jun 2022, 12:04 PM

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 percent to service the country’s massive foreign and domestic debt.

Prime 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.

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Analysts, however, say the problems stem from decades of poor economic management by successive governments and military rulers who have failed to tackle endemic corruption and widespread 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 lack of farsightedness of (the previous 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 prime minister Khan in 2019 has never been fully implemented because his government reneged on agreements to cut or end some subsidies and to improve 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 through to June 2023, as well 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 result of permanent 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 practically that reflects our national priorities that tilt towards the security of the state instead of welfare of the people,” he added.

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AFP

Published: Sat 11 Jun 2022, 12:04 PM

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