The outgoing government that has about a month left in its tenure, announced the sixth full-term budget for the fiscal year 2018-19. In an unprecedented turn of events, a new Finance Minister, Miftah Ismail was appointed just a few hours before the budget was announced. Opposition party members outrightly expressed their discontent with the budget introduction, which also included a physical altercation initiated by PTI MNA Murad Saeed. They called the move unconstitutional and a usurpation of the next government’s right to introduce their own fresh budget 2018-19.

While the budget is being resisted by opposition parties, here is a quick overview of what it potentially means for the common man and the upcoming government.

In order to understand the response to the budget, the following comparisons must be kept in mind:

Image Source: Daily Pakistan

PMLN also announced the following salient features of the proposed budget 2018-19 on their Twitter account.

Some features are certainly laudable in terms of taking the pressure off low-income households. And, the progress of previous federal budgets is also undeniable. 

The concept of an ‘Awami Party’ introducing the ‘Awami budget” is key to understanding the possible popularity of the budget.

In particular, people are responding the federal employees’ salary increase of 10% and the increase in pension up to Rs. 10, 000. They are also responding positively to the tax cuts proposed in the budget. With the cutoff mark for income tax liability increased from Rs.400,000 to Rs.1.2 million, some distress in low-income households is also bound to reduce.

However, amidst the tax cuts, a possible political problem might be emergent in the near future, particularly for the upcoming government. 

The budget was announced just a day after Foreign Minister, PMLN’s Khawaja Asif was disqualified from parliament. Weeks ago Nawaz Sharif was disbarred from holding political office for life. In light of these developments and a crackdown on corruption, the popularity of PMLN government might have dwindled a bit. Extreme measures would inevitably follow. Of course, their die-hard political affiliates will still remain but by playing the common man’s friend card, PMLN is undoubtedly going to benefit from some image correction.

Experts such as Dr. Hafiz Pasha are also predicting that the introduction of such an expansionary fiscal budget so late will create potential problems for the upcoming government to keep up. For instance, with the target set of lowering the fiscal deficit from an expected value of 6.5pc of GDP to 4.1pc, the new government might have to resort to pressurizing taxation methods. This will potentially reverse some of the provisions in the budget presented today, leading to the unpopularity of the new government following the elections.

Interestingly, Miftah Ismail has also said that he discussed the budget details with opposition leaders earlier last month. So, their negative response to the announcement is a bit vexing to him. Whatever the political motivations may be behind the introduction of the budget 2018-19, it is important that the impact on common man is not negative. The relief measures introduced will hopefully have some positive effect on alleviating economic pressures. It is just a matter of time before the full impact is assessed as the government changes hands. Let’s see if the budget survives the change of government coming Pakistan’s way.

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