Despite steep reduction in development expenses over the last fiscal year, a large number of people are still struggling to make ends meet owing to the rising cost of living in the country as a result of prevailing price hike. As a consequence, business and families are left with no other option but to increasing their borrowing by acquiring additional funds from other sources such as Bank loans and asset liquidation.
On a micro level, total income should theoretically be more than total spending or at least equal to it. Those who achieve that surplus or equilibrium can balance their budget without becoming a victim of price hike or forced borrowing seems simple, doesn’t it? However, despite being that simple, it seems that this simple financial concept has been very difficult to be understood by the people who draft country’s national budget.
It is worth noting that macro expenses of our country continue to increase at a constant pace, compared to the revenue it generates from various other sources, which leads to budget deficit. To be more specific, government is spending more than what it receives in form of taxes and other sources.
Interestingly, failure to accumulate enough deficit to carry necessary tasks results in borrowing funds from financial institutions, such as International Monetary Fund (IMF). Also, IMF charges “interest” on the funds that it lends to the country, because there is no such thing as free meal.
Moreover, in a country where interest is considered “haram” and individual prefers to keep their funds in a non-interest bearing accounts, It may come as a shock to many people that most of the country’s finances are being carried on a basis of borrowed funds with interest being paid to lenders. Therefore, even if you choose to not earn or pay interest, our government certainly doesn’t feel shy about it.
In case you missed it, here are a few important points of the current fiscal year budget.
- Accumulated budget expenditure in 2017 is approximately PKR 4.9 trillion
- The budget deficit is almost PKR 1.3 trillion
- Health budget is PKR 12 billion
- Defense budget is PKR 860 billion
- Education budget is PKR 84 billion
Taking aforementioned figures in consideration, the biggest expenditure of the current fiscal year that our government is facing is interest, not health, education or defense.
Experts believe that the budget deficit situation in the country will not get better until the regulatory bodies of the country will stop relying on foreign borrowing and develop a reasonable strategy in a bid to improve the situation.