Aziz claimed poverty went down by 4.2 per cent compared to last year

By Asif Farooqi, IOL Correspondent

ISLAMABAD, June 15 (IslamOnline.net) – A number of "relief measures" in the new Pakistani budget, recently presented to the parliament, received mixed reactions from ordinary Pakistanis and economic experts.

In its 2004-2005 budget, the government put forward a number of measures, which it claimed would help economic growth and especially the middle class to maintain their livelihood in a decent manner.

This included a 15% raise in civil servants' salaries and a 30% reduction of duties on imported cars.

Economic analysts believe the rise in inflation and unemployment rates forced the government to announce the pay raise.

While the raise will cost the government over 100 billion rupees, the impact still was far from satisfactory with many believing the move was too little and too late.

"We were waiting for this day since 1994, and today when we have this raise, its just peanuts," Muhammad Tahir, a government employee told Islamonline.net, referring to the last raise in the government salaries ten years ago.

"The inflation and price-hike is up by 400 per cent and the salaries have been raised by 15 %, what a joke," Mukhtar Ali, another government employee said.

However, some others saw the move as a step in the right direction.

"This is not the end of it. The government has promised to review this situation within six months and I am hopeful for future," said Sultan Khan.

The government has announced that it would revise the pay raise decision in six months.

Meanwhile, several Pakistanis ridiculed the importance of the government's decision to cut down duties on imported cars.

"This is a joke with the poor people of this country" said Hamidullah, a clerk in a government department.

"Your are making the cars cheaper while prices of bread and butter are sky rocketing."

Muhammad Hayat, a student at a local university, agreed.

"I am not concerned with the prices of cars. Have they reduced the prices of wheat, edible oil, sugar, vegetables or anything which I am using."

He said this is pro-rich budget, a budget for those who drive cars and not for those who travel on buses or public transport.

Prices of daily use items including wheat, sugar, oil, onions and other kitchen items have surged.

However, Nadeem Malik, an economic expert and analyst, said the relief measures were the best aspect of the new budget.

He said for the last five years, the country has witnessed a budget revolving around the tight fiscal policy aiming for economic stability in the country.

"Because of the tight policies there weren’t enough spending for social sector," Malik recalled.

He said this time it’s different. "The government has shifted its focus this time from stabilization to expansion of economy that is the reason the government has increased its spending to give boost to economic activity in the country."

Khalid Azim, a former banker cum journalist, question the government claim that poverty was scaling down by 4.2% compared to last year.

He asserted that the figures presented by the government on poverty in the new budget were neither complete nor authentic.

"This is very interesting to note that in a country where agriculture, which form 26% of the total economy and 65% of total exports, that sector is showing negative growth and inflation is high, how can poverty be reduced."

Goodbye IMF

According to experts, the most important part of the new budget is the one on doing away with foreign loans.

"Pakistan not borrowing money from foreign donors is a good news for the country," Malik said.

He asserted that self sufficiency is the best remedy to tackle issues like curtailing non-development expenditure and to divert more money to pro-poor spending.

A Major portion of Pakistan’s annual budget, almost 35 per cent, used to go to the payment of loan installments to IMF and other donors.

Analysts believe non-dependence on foreign aid and loans would not only help the country economy to take a boost, but it also would have a positive impact on national psychology.

In his budget speech before the parliament on June 12, Finance Minister Shaukat Aziz said Pakistan will no more borrow from the International Monetary Fund (IMF).

"I and every Pakistani today is proud to announce today that this year is our last loaning program with the IMF," he added.

"From next year we will not go to the IMF seeking loans. Good Bye IMF."

Pakistan has largely been dependant on funding from IMF, the World Bank and other multilateral donors to mainly finance its development spending and to meet its budget deficit.

Islamabad has been borrowing almost 2 billion dollars from foreign lenders since more than a decade.

But during the few years this culture has been changing and the new budget saw the biggest change so far in this context.