IN more stable and responsible polities, the federal budget is a statement of intent. It is based on a medium-term policy framework — say, three or five years — looking at areas as diverse as energy, social protection, security and, of course, growth. In Pakistan, we have no such luck. The fifth and final budget presented by this government in parliament on Friday is, unfortunately, largely a meaningless document. Finance Minister Hafeez Sheikh quoted all manner of figures and made all sorts of predictions about where key macroeconomic variables will stand at the end of June next year. The problem is, it’s hard to take any of the figures or predictions seriously. Will revenue be X or Y, growth rates A or B, budget deficits C or D? The only thing that can be said with any certainty is that government figures now almost invariably underestimate expenditures and overestimate revenues — until reality inevitably intervenes and a painful revision is required. In fact the obfuscation is so deep that even the finance minister did not appear sure where the deficit in the outgoing financial year will clock in at: five-and-a-half per cent or seven-and-a-half per cent? When a government fails to establish even this most basic of credibility, the relevance and importance of an otherwise important document such as the federal budget vanishes.

One of the key problems facing the economy is the power crisis. Mr Sheikh had some words on the matter, pointing out that subsidies worth Rs1,250bn have been provided to the power sector over the last five years and that “There are system losses, non-collection of dues, interest charges on delayed payments and a host of management issues.” Good, so the government knows what it’s dealing with. But then this was all the finance minister had to say about possible reforms: “Government is undertaking reforms to set the system right, but these are painful reforms and will not be implemented overnight.” Translation: there are no power-sector reforms intended this year. This for a problem that emerged in the mid-2000s and has yet to seen any meaningful reforms drawn up or implemented to tackle the problem. To describe the government’s handling of the power crisis as reckless mismanagement would be almost charitable in the circumstances. The problem is not just of finding solutions, it’s of developing a consensus on tackling deep-rooted economic problems — a consensus within the government and across the political spectrum given a parliament in which no single party has more than 35 per cent of the seats. But be it power sector reforms or raising the tax-to-GDP ratio, the government has done virtually nothing to develop a political consensus on necessary but unpopular measures. That PPP members of parliament enthusiastically thumped their desks when Finance Minister Sheikh announced various tax breaks and other election-year goodies was an indication of just how far the political class is from economic reality. That politics trumps everything can be gauged by a rumour about the government’s announcement of a 20 per cent increase in salaries and pensions for federal government employees. Always a favoured ploy in an election year, the salary and pension hike is seen in some quarters as a way to force the Punjab government to follow suit — thereby limiting the PML-N’s ability to spend lavishly on election-year development projects to win votes in Punjab (a provincial government’s ability to borrow is much more limited than the centre’s).

The result of this epic mismanagement and irresponsible statecraft is that Pakistan is edging closer to another IMF bailout. In fact, independent observers suggest that the sooner Pakistan does this, the better it will be able to stave off massive pressure on its currency as the current account deficit widens and large loan repayments loom. But IMF packages are deeply unpopular and if the government decides to carry on until next March, it may try to delay the inevitable — thereby compounding the pain. The outlook for the year ahead already looks grim.