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Deficit Budgets: The Mother of
All Economic Ills
The current multiple laired economic
devastation in Pakistan is the ultimate result of years of
deficit budgets.
Consecutive Pakistani governments, legal or
illegal, elected or non-elected, military or civilian, made
deficit budgets with provisions of borrowing money from internal
and external resources.
As internal resource, these governments
issued various kinds of certificates, treasury notes, bonds or
directly borrowed money from banks or simply printed money
without required assets to back it. As external source,
government functionaries constantly pursued international
financial institutions for lending money to meet the budget
deficits. Sometimes, these monies were borrowed at such harsh
conditions which outbalanced the benefits and these monies
consequently became cumbersome burden on Pakistani economy.
Today, Pakistan is completely trapped in debt
with no possibility to get out of it. Every year, with deficit
budgets, this debt trap is tightening Pakistani economy. So much
so, now, Pakistani government has to oblige World Bank, IMF and
other international lending financial institutions to take steps
contrary to the economic, political and national interests of
Pakistan.
Prime example, electricity rates;
practically, Pakistan’s basic energy structure has collapsed.
Anyone familiar with fundamentals of economic development knows
that without cheap and reliable energy supply there can be no
economic development. Constantly humming machines not only play
major role in nation’s GDP they also provide jobs to workers to
keep their family lives financially moving.
As a progressive third world country, govt.
of Pakistan played a vital role in development of its industrial
base. It established many important large scale industries which
kept Pakistan’s industrial base functioning. IMF and World Bank
constantly pressured Pakistan to privatize many such industries
which were either operated directly by the government or by semi
autonomous govt. bodies.
The idea behind this privatization was to
give boast to market economy, engage private sector in
industrial production to the max, and minimize govt. control
over markets. Apparently it is a fancy idea. It has worked well
in developed western countries for last 100 years or so.
However, legislative evolution, helped maintain a fair balance
in western societies which protected common citizens’ rights up
to the extent that it also allowed the healthy growth of private
industries.
Pressuring countries like Pakistan to
privatize basic industries like banks, steel, electricity failed
those countries economies. Pakistan’s broken energy supply
sector is the prime example of World Bank’s and IMF’s such
dictated policies. The ruthlessness of these policies can be
understood with World Bank’s and IMF’s insistence on raising
electricity prices. The country’s economy is facing ultimate
demise, but the World Bank and IMF are concerned about their
interests, whereas govt. of Pakistan is worried about the
delivery of the next installment of the loan committed by these
institutions. No one is concerned about Pakistan’s failing
industries, economic downturn, growing unemployment, rising
numbers of suicides due to economic hardships and widespread
violence in society because of failed economic system.
Is anyone serious about fixing Pakistan’s
economic problems? All ostensible indicators suggest neither
govt. of Pakistan nor international financial institutions want
Pakistan should come out of the shadows of economic disasters.
To us, the first sincere indicator of making
Pakistan an economically healthy country is to force govt. of
Pakistan to balance its budgets. The army of illiterate
parliamentarians, if they are sincere in watching Pakistan’s
economic interests, should fight tooth and nail for every penny
allocated for anything in the budget. First, the govt. should
not dare to present deficit budget in the parliament. If govt.
presents a budget with deficit, the parliamentarians should make
sure govt. does not get away with it. Parliament should declare
deficit budgeting a crime against the people and the state.
Balanced budgets will discourage govt. from further borrowing.
Economic freedom will decrease Pakistan’s dependence on
international financial institutions which will insure
Pakistan’s freedom in policy formulation.
The way to
Pakistan’s freedom is based on balanced budgeting. The volume of
deficit of budget will determine the level of Pakistan’s freedom
in its policy formulation including the prices of energy
products including electricity.
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