As the federal budget for the upcoming financial year approaches, the country finds itself at a pivotal moment amidst severe economic challenges and a historical absence of fundamental financial reforms. While the forthcoming budget may not signal widespread prosperity and development, early proposals indicate that the government is making strides toward improvement, with some positive outcomes already visible.
The Annual Plan Coordination Committee has approved a proposal to allocate 1,221 billion rupees for the federal development program in the next financial year. This allocation aims to address critical infrastructure needs and stimulate economic growth despite limited financial resources. The GDP growth rate, which experienced a negative trajectory for 68 years until 2020 and improved to 2.4 percent in the current fiscal year, is projected to reach 3.6 percent in the next fiscal year. This upward trend signifies a recovering economy.
Inflation, which remained at 26 percent for most of the current fiscal year according to the World Bank, is expected to decline to 12 percent in the next fiscal year. This anticipated decrease is attributed to the recent significant reduction in the prices of basic commodities. The rate of increase in total investment is estimated to rise to 14.2 percent, reflecting growing confidence in economic policies and the potential for enhanced economic activities.
A substantial portion of the budget, 877 billion rupees, is earmarked for infrastructure projects. This includes 378 billion rupees for energy projects, 173 billion rupees for transport and rehabilitation, 284 billion rupees for water projects, and 42 billion rupees for physical planning and housing. These investments are crucial for long-term economic stability and growth.
However, the proposed budget allocates only 83 billion rupees for the social sector, including health, education, and higher education, compared to 203 billion rupees last year. This significant reduction is concerning, as these sectors are vital for human capital development and overall societal well-being. The health sector budget is reduced to 17 billion rupees, and education and higher education are allocated only 32 billion rupees. These cuts are attributed to the constraints imposed by the IMF program and could adversely affect the quality of healthcare and education services.
A major reduction in development works includes the proposal to provide no funds to members of the assembly for their constituencies, compared to 61 billion rupees allocated last year. This decision might hinder local development initiatives and the provision of daily life facilities to citizens across the country. The transport and communication sectors face a budget cut of 72 billion rupees, which could slow down progress in these critical areas.
The budget proposals for the next financial year present a mixed bag of opportunities and challenges. The government’s focus on infrastructure development and efforts to stabilize the economy are commendable. However, significant cuts in social sector funding and the absence of allocations for local constituency development raise concerns about the potential long-term impacts on healthcare, education, and local governance.
To navigate its economic crisis successfully, it is imperative that all stakeholders, including citizens, businesses, and the government, collaborate effectively. Expanding the tax net and ensuring the transparent and efficient use of financial resources will be crucial in achieving sustainable economic recovery and reducing dependency on loans. With concerted efforts and strategic planning, the promising results of the current initiatives can be realized, paving the way for a more stable and prosperous future.
