SOMETHING strange happened in the budget announcement on Wednesday evening.

Where everybody was expecting the government to announce a deficit of 7.5 per cent of GDP for the current fiscal year, Finance Minister Ishaq Dar instead announced the deficit at 8.8pc.

This is no minor difference. A 1.3pc discrepancy means almost Rs300 billion. So the government appears to have announced a deficit number that is Rs300bn in excess of where it stands now, which can only mean they’re planning to spend that kind of money before the end of June. “Is a large subvention in the works for the power sector?” asks Dr Hafiz Pasha, former financial adviser and chair of the Revenue Advisory Council.

Sources in the banking sector also agreed they were taken by surprise. Is the government preparing to lift a jaw-dropping amount in the next T-bill auction scheduled for the 27th of June, three days before the end of the fiscal year?

If so, it would partially explain how it intends to ‘eliminate’ the circular debt in 60 days without disturbing their first fiscal year numbers too much.

The budget speech, alas, carried too many reminders of the last Nawaz Sharif government. Those hoping for a change in mindset ought to brace for a disappointment.

There were schemes whose purpose was unclear. The elimination of duties on hybrid cars, for instance, may sound good to somebody tired of waiting in CNG lines for fuel. But consider the numbers: “A hybrid car can cost $20,000,” says Ali Habib, chairman of Indus Motors which could benefit the most from the measure since Toyota manufactures the world’s most popular hybrid vehicle. “On the other hand, the fuel savings it enables are about $800 per year, per car.” But he cannot understand what the government is trying to do with this scheme.

“You spend $20,000 to save $800?” he asks. “The revenue loss and the forex drain implied by the scheme is far larger than any savings that might come. So I don’t get what the intended outcome is.”

It’s also hard to get what the intended outcome is with an expansion of roads and highway infrastructure at a time the government is struggling with a power crisis and a yawning fiscal deficit. Rs63bn have been allocated for this purpose.

A raise in the GST rate by 1pc will hit the common man the hardest, whereas roads and hybrid vehicles will hardly compensate. Raising revenues from the GST is something the last Nawaz Sharif government also resorted to, doing it by Presidential Ordinance at that time.

At the heart of the budget, though, is an unrealistic revenue target going beyond Rs3 trillion. It’s hard to see a credible financing plan to support a 23pc increase in tax revenues at a time when the tax machinery has struggled to bring about a 6pc increase in the current year.

The increase in GST can net Rs60bn. And the 0.5pc tax on movable property has the potential to raise some money, considering many stock market transactions, time deposits in banks and other depository vehicles such as National Savings Schemes and Behbud certificates are in the line of fire.

But other measures have run into opposition already. Minutes after the meeting ended, the Karachi Chamber of Commerce and Industry was up in arms about a measure to get unregistered individuals to pay 5pc more in sales tax. Shaukat Tarin tried this measure a few years ago, and had to retract it the very next day. Let’s see how Prime Minister Nawaz Sharif’s mandate holds up under the strong opposition that is inevitably brewing in the trader community against this measure.

Of the Rs225bn announced to be spent on the power sector, funding is available for Rs107bn. The remaining, according to the speech, will be raised by distribution companies, an assumption that strains credulity.

A bevy of small taxes have been announced — from builders to salaried individuals to hospitality services such as hotels and clubs and marriage halls. In addition, all income declared to federal authorities as agricultural income in order to avail an exemption from federal income taxes will need to be accompanied by certifications from provincial tax authorities that the income has been taxed by them.

None of these add up to a credible financing plan for such a massive increase in the revenue target, and certainly do not create the fiscal space for a large roads and highways programme.

Nothing was mentioned about tariff reform — whether gas or electricity — which is intimately linked to the budget since this is where the bulk of subsidies go, and must be a part of any plan to ‘eliminate’ the circular debt. How this elimination will be accomplished in the absence of price reforms is the big question.

The old Nawaz Sharif government made another appearance in the “soft loans for youth” scheme, where it was announced that “banks will run this scheme, not the government. Banks will charge only an 8pc mark-up” and so on. But the banks are no longer government-owned, Mr Minister. So how do you intend to get them to run this scheme?

But the news isn’t uniformly bad. “It’s a comprehensive budget,” says Dr Pasha. “It has outlined the challenges facing the country quite well.”

But the silences in the budget, and the loudly announced schemes, are indications that the new government is struggling to find its feet in a fast-moving and highly challenging environment.