Financed Minister Muhammad Aurangzeb’s disclosures that he coming budget would include relief for the salaried class sounds too good to be true. First of all, what the federal government considers relief is not necessarily going to be much. Further, it may merely reflect inflation, and sit may be motivated by the government’s desire not to stop salaried persons losing the benefit of higher salaries to taxation. As the country’s largest employer, the government would also wish to ensure that its employees benefited from any raises for inflation that might be made. It remains to be seen whether Mr Aurangzeb also contemplates a salary raise for government servants, or whether he expects them to be satisfied with whatever relief he might afford them. This would also mean that he does not expect to use the usual tactic of the tax collector, which has been to hound the alright, and impose ever larger burdens on it.
While the salariat is considered to be a key constituency of the ruling PML(N), there are enough dissenters for it not to be counted as much among the party’s assets as traders and industrialists, who have consistently supported one of their own. They have recently gotten considerable relief in the reduction of power tariffs, and the declaration by Mr Aurangzeb that there would be more relief given in the power tariff indicates that the government is anticipating positive developments, allowing it to bring down the tariff. This would be particularly welcome at a time when the USA has paused a crippling tariff, and exporters are looking to obtain any competitive edge they can over rivals. Though Pakistan wishes to negotiate, it is going to have to join a long queue, and deal with the fact that some of its rivals are going to press as hard for Pkistan’s tariffs to be kept high, s for their own to be reduced. It also has to prepare for the consequences of the final tariff being around the figure that was originally announced.
Mr Aurangzeb’s word is not final, even though it should be. He has still to run these ides past the IMF. Its Board of Directors has still not approved the staff-level agreement reached recently. The IMF team due in the coming week to review the budget proposals will have to sign off on these proposals for them to become part of the budget.
