June 10, 2008	Tuesday	Jamadi-us-Sani 05, 1429

KARACHI, June 9: Budget for next fiscal year carries neither hope for betterment nor fear of additional taxes while those involved in analysis of the economic situation say ‘the budget is a non-event.’

The political uncertainty is another key factor, which pushes aside the hopes for any improvement in next budget scheduled to be announced on Wednesday.

“A depressed economy loaded with all kind of deficits cannot give hopes to the masses standing in long queues to get essential items like wheat flour across the country,” said Ahmed Saeed, an economist.

Analysts, who have been calculating and analysing the expected economic measures to be taken in the budget for 2008-09, are of the view that the only effort expected from the government is to retain the strength of whatever left for the weakening economy.

“The budget is non-event. I don’t expect any thing, which can bring change in life of a common man or woman,” said Mohammad Imran, head of research at a brokerage house.

Brokerage house analysts are satisfied with the pre-budget announcement of the government, which exempted stocks business from capital gains tax for another two years. They said the only good thing the government could do in the budget to please the rich of the country had already been done.

“The government projections are very optimistic and essentially ignoring the difficulties being experienced by the economy,” said the latest report of SPDC (Social Policy and Development Centre).

In the context of the recent trends both in the global and domestic economy it is difficult to visualise in the short run a recovery in the growth rate of the economy, the report added.

The report expressed doubt over government’s projection for growth of economy. It said the GDP growth could remain around 5 to 5.5 per cent instead of 6.5 per cent as projected by the government for fiscal 2009.

Analysts and economists believe that the government would rely heavily on domestic and foreign buying to meet its expenditures of next fiscal year.

“If the borrowing is kept at the level of current fiscal year, it will further inflate the economy bringing more miseries for the poor,” said another analyst.

Most of the analysts are expecting that the government would borrow more through Defence Saving Certificates by increasing its rates instead of directly borrowing through State Bank. The government borrowed over Rs538 billion so far from the SBP, which the SBP said inflated the economy causing high inflation with record food inflation.

Economists and analysts do not see any ray of hope for improvement and relief for the poor in the next budget.

“There is no law to stop us selling rice at Rs120 kg or flour at Rs30 per kg. We will sell rice even at Rs500 per kg and nobody can stop us because the market demand will help us to increase prices,” said a rice shop owner. There is strong perception that the prices are out of ambit of the government and no law can be made to control the prices of even essential items like rice and flour.