With a week to go before budget day, some outline of what to expect has already come into view. But many crucial details are still missing.

The last cabinet meeting held on Tuesday, for instance, approved the Budget Strategy Paper showing where revenues are expected to come from and what expenditures are being programmed. But the only details to emerge thus far are about the discussion which revolved largely around the two-year track record of the government, along with its inheritance, and the medium-term outlook till 2018.

In a testimony before a Senate committee last week, the finance secretary shared a few details about next year’s revenue and expenditure plan.

These included the reform of customs duty slabs, replacement of national tax numbers with CNIC numbers, further negotiations with Etisalat on the release of outstanding amount in PTCL privatisation, and nominal growth in all expenditures except for defence.

The latter is set to receive a boost of 10pc in its normal allocation as well as the additional amount of Rs160bn for expenditures arising out of Operation Zarb-i-Azb and raising forces to protect Chinese investments.

From all the details trickling out, and the string of statements coming from high offices, it appears the budget will be pulling in a number of contradictory directions.

The finance secretary, for instance, told the Senate committee that the budget will continue with stabilisation by restraining expenditures, whereas the finance minister has been saying the budget will shift gears away from stabilisation towards growth. Meanwhile, the prime minister wants realistic targets set for every ministry, and his media wing promises that the budget will “focus on the welfare of the common people”.

There will be “out-of-the-box solutions” to persistent problems such as the circular debt and inelastic revenues — though thus far, from what is coming out, very little ‘out-of-the-box’ thinking seems to be at play.

It is fairly clear at the moment that many important details are still being worked out. The total collection under the Gas Infrastructure Development Cess, as an example, appears to still be under negotiation.

This is emerging as a large revenue head, and without it a viable revenue plan cannot be considered complete. A measure to tax remittances, which was mentioned by the FBR chairman before the Senate committee, was shot down almost immediately following an outcry from the banks.

Given the many different objectives that the budget is supposed to pursue — from consolidating stability to broadening the tax base to documentation measures to kick-starting growth — it would have been reassuring if the emerging details were more coherent.

It would be to the government’s benefit to signal a little clarity in the run-up to the budget speech to pre-empt any unrealistic expectation. The week between now and the budget announcement provides a good opening for showing precisely this.

Published in Dawn, May 28th, 2015

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