Window dressing of economy
THE government has adopted a policy of window dressing by acquiring loans and grants from foreign donor agencies and countries and showed a strong balance sheet.
It has acquired up to $13.07 billion from seven countries and eight donor agencies from March 25, 2008 to July 1, 2012.
They actually did window dressing by showing foreign reserves to the general public and voters. Almost every member of the government last year boasted that the country has $16 billion foreign reserves in their account which is an achievement while ignoring the fact that the major share came through foreign borrowing and in the form of grants. This is nothing but cosmetic in nature.
Loans always have a negative impact on the economy in the long run, especially when it is not utilised in a productive way. The government failed to do so which has caused a burden on the economy.
As a well-known banker the contemporary finance minister has good relations with donor agencies abroad which has had a great impact on the government to go to IMF for financial assistance regardless of any plan on how to utilise the fund when acquired.
There is no plan on how to increase the revenue. They are only relying on foreign debt for budget deficit which has been a big disaster.
The main goal of the government was to inject money into the Benazir Income Support Programme and satisfy voters with targeted disbursement of funds to win the next general election. Another goal was to inject more money into the PSDP fund.
The IMF has also shown concerns over the government’s fiscal policy for this year and is hesitant to sign a new deal with the government because they think it is an election related to the fiscal budget.
They have also shown concern over declining reserves of the Central Bank which fell to Rs9.82 billion and will surely fall more because more foreign debt is due in the near future.
The window-dressing policy of the government has serious consequences when linked to the future. The newly-elected government during its first year will have no choice but to go to the IMF.
No reform has been brought by the finance minister who has only manipulated facts and figures and pleased his bosses and fooled the general public.
The current deficit will widen more and more when the fiscal year reaches its end because it is an election-oriented budget. Foreign debt payments are also due next year which will pose the next government with serious shortage of reserves.