The federal government is still praising itself for presenting a fair and balanced budget despite ample evidence that IMF had an overbearing effect. There are already indications the IMF is still not satisfied with the budget allocations and there might be revisions in the coming days.
It goes without saying the economic situation is deteriorating and the people had higher expectations for the budget, hoping it would provide some relief. The price of petrol is way above the Rs200 threshold and there are indications of a further hike which can even surpass Rs300 per litre. The monthly inflation rate for May has hit a record high of 13.8% and commodity prices have risen.
The budget outlay his year was Rs9500 billion, the highest ever. The government has given tax breaks to those earning less than Rs 100,100 per month which could lead to a drastic reduction in tax collection. The IMF is also displeased that its proposals for income tax have not been implemented and want further revisions while raising taxes on small traders has resumed.
Although a ban on imports of luxury goods is a good move, the GDP growth rate forecast of 5% is also a sign of economic crisis. Will be. The only relief being provided to weaker segments is a mere Rs 2,000 monthly allocation to stem rising inflation.
The government announced a 15 percent raise in salaries of government. This is a welcome decision but it will lead to further cost-push inflation. There are over a million people working in the public sector but no efforts have been made for those working in the private and informal sectors. The government should also encourage businessmen to provide relief to their workers.
The biggest increase in taxes was achieved by setting a target of Rs 750 billion in petroleum products levy which is a clear indication that prices could rise further. The prices of petroleum products are expected to rise further by at least Rs30 per litre at the beginning of the next financial year.
The federal budget lacks focus on education, employment and health. It seems that the entire focus of the government is on debt servicing and borrowing from the IMF. The government needs to understand the problems of the people if it has concerns over the next elections.
