AS the last quarter of the fiscal year is set to begin, the federal government is starting its conversations around next year’s budget.

This is a crucial time and putting things on the right track at this stage will be critical.

The country is in the midst of a strong macroeconomic adjustment in which progress has been made, but victory cannot yet be declared.

In addition, the spectre of a massive slowdown in the global economy and the COVID-19 related shutdowns that might become necessary in Pakistan if an outbreak is to materialise, have cast their own pall of uncertainty over the prospects facing the economy.

Read: Pakistan among 20 states most affected by China slowdown due to coronavirus

The adjustment has exacted an enormous toll on people and business.

Depressed demand and high interest rates have squeezed many businesses to the point of closure, while high inflation has crippled people’s purchasing power, pushing millions into poverty.

Just as the demands for an end to the adjustment and a return to growth have reached fever pitch around the country, the uncertainty from the impact of COVID-19 in the coming weeks has emerged as a major source of anxiety to further cloud the outlook.

Little wonder then that the budget debates have kicked off, with the finance ministry listing all the constraints to the resource envelope at the outset.

Among these constraints, it has cited the mandatory transfers to the provinces under the NFC award, debt servicing costs, rising pension expenditure, and high allocations for subsidies and income support programmes.

Pressure is mounting on the government to find a way to roll back provincial transfers, and curtail allocations for subsidies and income support programmes.

Pressure is also growing on the State Bank to reduce interest rates to help curb debt service expenditure that has risen sharply with the latest cycle of monetary tightening.

The politics surrounding each of these movements will push some backs against the wall, doubtless, but the will to continue with the adjustment is now virtually gone.

If the government is forced to think of sweeping shutdowns in order to contain an outbreak of the COVID-19 virus, this situation with its significant trade-offs will be aggravated further.

These shutdowns, wherever they have been implemented, exact a steep economic cost with factory closures and supply chain disruptions, but undertaking them is thus far the only known way of containing the spread of the contagion.

In short, critical decisions are lying in wait for the government and it would be a grave mistake to be caught unprepared.

As budget making picks up pace in the days to come, and we arrive at more clarity regarding an outbreak, decisive and clear leadership will be required.

This is not business as usual.

Those who come to the table with no ideas beyond protecting their traditional priorities will be letting their leadership down.

Published in Dawn, March 13th, 2020