There is something for everybody in this budget.

The government promised a budget that will aim to boost growth as well as improve the lot of the poor, and almost every tool available to the government to achieve these aims has been used to the hilt.

Development spending has been hiked by more than 40 per cent. Virtually every category of business, especially manufacturing and financial services, has received tax cuts. Minimum wage for daily wagers has been raised by more than 20pc, while salaries for civil servants have been hiked by 10pc. The latter is important because they tend to set the bar for salary increments for many private businesses too.

Clearly, the government is aiming to put a smile on as many faces as it possibly can next year.

Industry has received sweeping tax and custom duty exemptions, ranging from raw materials for textile exporters, paper and board, steel, pharmaceuticals, paints, chemicals, leather, electronics, cables and fibre optics and automobiles and on and on. Hardly any industry is left out of the bag when the tax cuts are all considered.

The measures specifically aim to boost local assembly of mobile phones as well as encourage investments in refineries. Capital gains tax on stocks has been reduced by 2.5pc in an effort to boost volumes further. Turnover taxes have been reduced across the board and eliminated for all enterprises in Special Economic Zones. Automobiles of smaller size have also seen reduction in sales tax, or elimination of federal excise duty (FED) altogether. It is difficult to recall the last time the breadth of tax and duty cuts given to industry was as wide, and in some cases as deep, as this.

There is one face that will be harder to put a smile on though. The International Monetary Fund (IMF) will want to know how they intend to pay for all of this.

The government committed a fiscal deficit target of 5.1pc of GDP for next year, but the budget sees the same deficit at 6.3pc, around Rs541 billion higher than agreed. And this is despite the fact that GDP for FY22 is projected to come in Rs1.81 trillion above what was projected at the time of the Fund programme.

The budget sees a hike in the external loan requirement of almost 25pc from last year. The FBR tax revenue target has been set at Rs5,829bn, a full Rs134bn less than what has been committed to the IMF. It is not clear whether the fund has signed off on this reduction since the talks are still continuing.

Subsidies have been programmed at Rs682bn, of which a lion’s share of Rs596bn is for the power sector, an area of specific concern for the IMF. The Fund was specifically told these will be “rationalised” with the aim of keeping total subsidies at Rs530bn, but in this budget the power subsidies alone have blown past this target. The breakdown shows that some of the core commitments given to the Fund may also now need to be relaxed.

The tariff differential subsidy for last year overshot its budget of Rs110bn by Rs81bn, almost 74pc. For next year, it has been programmed at Rs184bn where the Fund was promised that these would be brought down through better targeting. Moreover, power subsidies under the industrial support package and the zero-rated industrial rebate have been retained and will cost Rs31bn, even though these were committed to be eliminated.

Likewise, the budget provides massive power subsidies to K-Electric for both industrial support (Rs22bn) and for tariff differential (Rs56bn where last year’s spending on this was Rs16bn). The prime minister’s promise that power tariffs will not be raised has put a lot of smiles on people’s faces, but now the government faces two key challenges in seeing this promise through .

The first is to convince the IMF that these allocations are necessary and there is no way around them. And if they succeed in this, then second will be to ensure that taking on these spending responsibilities will not lead to further accumulation of the circular debt.

Read: Pakistan cannot increase tariffs or taxes, IMF told: Shaukat Tarin

It is worth focusing on these numbers because they form the core of the commitments given to the IMF and will be the chief bone of contention in the ongoing talks. The government had committed to curb expenditures, raise revenues and contain the growth of the circular debt to stay in the programme. The budget aims to boost growth, and redistribute some of the fruits of this growth to the people via wage and salary increases. It aims to control inflation by not permitting power tariff hikes.

But will the government be able to meet the commitments it has made?

To do so, it has to wriggle out of the commitments made to its creditors. Chief among these is a revenue plan. And on this point, the budget becomes less convincing. Some items that are eligible for reduced sales tax (under the Eighth Schedule) are “to be streamlined and reduced rates other than relating to basic food items, health and education are proposed to be brought into standard regime”. Much of the revenue growth may well come from the growth itself, from the simple increase in the cashflows of businesses and imports, even if these have been subjected to rate cuts.

But the thrust of the finance minister’s speech on revenue measures was on what they call “administrative measures”, and he specifically pointed to pulling retailers into the tax net and penalising non-filers, perhaps even with jail time. It is worth recalling that both these steps have already been tried with little results.

Broadening the tax base is a good idea, but relying on it as a revenue measure in the forthcoming fiscal year has never worked. The last such attempt was launched by Shabbar Zaidi when he became FBR chairman, and we all remember how that ended.

So which is it going to be?

The government has made two sets of commitments to two sets of people and it cannot keep them both. To its creditors, it has made specific, measurable promises of steps to reduce its debts and deficits, while to its citizens it has promised growth and prosperity. Now we wait to see which one of these commitments it succeeds in getting itself out of first.

The writer is a business and economy journalist.

Note: This write-up is based on a quick glance of the budget documents and produced in a short time period. It should be read as an initial impression and not as an exhaustive piece. More detailed write-ups will take more time to peruse the voluminous documents that make up the budget.