In a sense, this is the first Budget presented by a Shehbaz government. It had presented one before, in fact the Budget running out on June 30, but that was almost presented while staring down the barrel of a dissolution to be followed by a general election. It had been a time for a Budget in which the mouths of the coffers would be thrown open, but they were not. Similarly, this Budget was expected to be a scorcher, as the Finance Minister, who was making his maiden presentation, was still involved in negotiations with the IMF, from whom a package was urgently required. It remained to be seen whether the Budget would meet its requirements. The petroleum levy has been increased by Rs 20 or Rs 25 per litre, meaning that the government wants to keep fuel at its peak. Of course, if international oil prices also go up, the levy would remain. However, the General Sales Tax has not been increased. At the same time, the Federal Board of Revenue has been set an ambitious target of Rs 13 trillion, including upward revisions in the income tax. Retailers have been spared a dreaded turnover tax.
An interesting aspect of the taxation measures has been the zero-rating of materials used in solar panels, inverters and lithium-ion batteries. That seems directed to encourage the manufacture locally of solar panels, in the teeth of Energy Ministry resistance and campaign for the reversal of the present policy of adoption of solar power. The impression also came through that the IMF favoured some sort of revision of the current policy, as the distribution companies were finding that consumers switching to solar power had led to their already weak financial positions weakening even further. As the IMF places great store by the circular debt issue, it has taken the side of the power companies. The problem is that, among all sectors and industries, the power industry is in a state of flux in which the traditional power generation companies are the past, but are still very influential.
One of the components missing in the Budget was how to achieve a major increase in exports. Without such an increase, there is no hope of escaping the debt trap in which the country is enmeshed. With Rs 9.8 trillion earmarked for debt servicing, just over half of the total no-development outlay of Rs 18.9 trillion, the Budget was clearly not an easy one to make. It avoided putting much further burden on the populace, though that is to damn with faint praise.
