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The briefing

Courtesy: Dr Farrukh Saleem

On January 1, the minister for finance, revenue, economic affairs, statistics and privatisation gave a two-hour presentation to the PM, cabinet members and the media. The good news is that the minister appeared quite on top of things financial. The other good news is that transparency now seems a high priority at the ministry. Yes, the minister must be working overtime. Yes, he may actually be overburdened.

The other good news is that the minister rightly pointed out the budgetary deficit as the ‘root of all financial ills’. The bad news is that the ‘root of all financial ills’ was only mentioned once in two hours. The good news is that the minister seems determined to bring down the budgetary deficit from 8.8 percent of GDP to 6.3 percent of GDP. The bad news is that the minister did not say much about how he plans to liquidate the ‘root of all financial ills’.

The bad news known to everyone is that the economy is diseased. The good news is that the minister recognises inflation as one of the diseases. The other good news is that the minister identified five “main reasons”. The bad news is that the minister missed the elephant in the room. Technically, the five ‘main reasons’ account for some 10 percent of what is behind the current inflationary trend. Technically, 90 percent of what is behind the inflationary trend is unbridled government borrowing.

The good news is that the minister acknowledged the printing of Rs260 billion. The bad news is that no solution to the other two components – borrowing from SBP and borrowing from commercial banks – was presented. For the record, provisional monetary aggregates released by SBP reveal the borrowing of Rs842 billion during 145 days of the current fiscal year.

The good news is that secret service expenditures of 32 ministries have been abolished. The good news is that the PM has voluntarily given up his discretionary funds (remember, ex-PM Ashraf used up Rs42 billion). The good news is that the PM Office is going through a 40 percent expenditure cut. The other good news is that all other ministries are going through a 30 percent expenditure cut.

The other good news is that the PM is serious on privatisation. What that means is that the PM is serious about saving Rs500 billion a year every year. The bad news is that the PPP wants to play politics on privatisation. The other bad news is that the Privatisation Commission is not yet ready.

The good news is that the minister is aiming at building foreign exchange reserves of $16 billion by the end of the current calendar year. The good news is that the target for electricity generation has been set at 36,131MW. The other good news is that the GDP is growing much faster than a year ago. The other good news is that the prime minister is serious on economy. The bad news is that the Public Sector Development Programme continues to be a trillion rupee hole in the budget. The other bad news is that the government’s Commodity Operations continue to be a hundred billion rupee hole in the budget (and there was no mention of either of these holes in the presentation).

Someone once said, “for most folks no news is good news; for the press good news is not news.”

PS: Such a comprehensive briefing by the Ministry of Finance is unprecedented in Pakistan’s economic history.

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