How Pakistan descended into poverty

[AgNoStiC MuSliM]

Of course. That makes it perfectly okay. Of course.

I don't know if it makes it OK or not without a better breakdown and understanding of the overall pension numbers

 

[saiyan0321]

Hmm this is pretty interesting in the sense that after 18th amendment provinces have their own budgets which account for provincial pensions and pay scales.. For example provincial employees ( example those that did PMS or exams by ppsc) have their pay scale and pension from the provincial budget which is formed from the taxes and funds and the NFC a province has raised in a year.

The federal Budget indeed does have it's own pay scales and pensions but it must be remembered that the federal pension would include all federal employees ( example those that did exams by FPSC).

So unlike the past the federal doesnt have the pension burden of all of Pakistan but of its federal employees of federal regions, enclaves and offices and mind you the military is also a federal entity under the federal government just like the supreme court...

Fun fact the pay scales of civil judges in Punjab and sindh are different so why is that? Bcz provinces set their pay scales of their employees and a civil judge is a provincial employee.

Anyhow this isn't really relevant to the discussion...
Pakistan is poor bcz Pakistan has weak governance and corruption which goes from top to bottom and by bottom I mean the ppeople and by top I mean the ruling class.

Its a very long topic which requires a long post which I will try to get to

 

[VCheng]

I don't know if it makes it OK or not without a better breakdown and understanding of the overall pension numbers

Such breakdowns are never made available. National skortee and all that, you know.

 

[AgNoStiC MuSliM]

Such breakdowns are never made available. National skortee and all that, you know.

@saiyan0321 actually mentioned some aspects that need to be considered - the distribution of non-Federal employee pensions to provincial budgets. The military being a Federal entity likely comprises the largest group of Federal employees, hence the larger share in the Federal pension budget.

 

[GodToons]

@Nilgiri please teach your countryman the difference between 3.2% of less than $300 Billion and 2.3% of more than $1000 billion

India's 2018-2019 defense budget is $46.16 billion
Pakistan's 2017-2018 defense budget was $8.78 billion

Not trolling here, check the matrix used along with format (%GDP NOT $B). Hope you get the point.

 

[VCheng]

@saiyan0321 actually mentioned some aspects that need to be considered - the distribution of non-Federal employee pensions to provincial budgets. The military being a Federal entity likely comprises the largest group of Federal employees, hence the larger share in the Federal pension budget.

Of course. We need to make sure such figures are interpreted only in the proper manner to show that the expense on the military is appropriate and sustainable. I wonder how the IMF saw it fit to include reduced defense expenditure as a specific conditionality that was the cause of the delay in the final decision.

 

[saiyan0321]

@saiyan0321 actually mentioned some aspects that need to be considered - the distribution of non-Federal employee pensions to provincial budgets. The military being a Federal entity likely comprises the largest group of Federal employees, hence the larger share in the Federal pension budget.

Removing that 260 won't make a difference and only enhance our problems as we would have pensionless sector to deal with asking for some form of security for their services...

Our greatest problem is a number of them.

1. We don't have effective governance. Now what does that mean? That means that our government struggles to establish monetary writ of state. Direct tax collection is abysmal. How will a state earn if it doesn't collect direct taxes bcz indirect taxes effect the middle class the most but direct taxes effect the upper class the industrialist and that's where the real state money is yet the collection over there is abysmal. Wouldn't this hurt our pockets to combat our internal expenses ( not counting external expenses) ? On top of it all I will bring bill collection. Bill collection for resources provided by the state are a massive boost to state finances yet bill collection is abysmal especially amongst the industrialist and the sardars.. The power class again where the money is. To combat this the state fills the empty holes by increasing indirect taxes which lowers the middle class income..

The above is a single problem of a plethora of our problems..

then we have exports.. We struggle to export our products bcz we don't have internal finances to invest in our export sector to boom and refine products to boost our export sales which weakens our ability to generate reserves which forces us to struggle for our import ( not just products but all imports from plane repairs to weapons) and to fill this gap we take loans which weakens the economy forcing the state into more disarray...

On top of it all scarce resources and overpopulation play a huge role in this... This is a summary of our problems...

 

[AgNoStiC MuSliM]

Of course. We need to make sure such figures are interpreted only in the proper manner to show that the expense on the military is appropriate and sustainable. I wonder how the IMF saw it fit to include reduced defense expenditure as a specific conditionality that was the cause of the delay in the final decision.

The figures are what they are, and we've explained them as best we can - the military comprising the largest group of Federal employees gets the largest share of the Federal pension budget, with provincial employee/retirees pensions addressed in the provincial budgets.

Pakistan's budgetary constraints can be best resolved, long term, by widening the tax base, increasing collection of direct taxes and reducing billions of dollars in annual losses through large Public Sector Enterprises such as Pakistan Steel, PIA etc.

P.S: Also see Saiyan's post above. He offered more detail on some of the same points I made.

 

[VCheng]

The figures are what they are, and we've explained them as best we can - the military comprising the largest group of Federal employees gets the largest share of the Federal pension budget, with provincial employee/retirees pensions addressed in the provincial budgets.

Pakistan's budgetary constraints can be best resolved, long term, by widening the tax base, increasing collection of direct taxes and reducing billions of dollars in annual losses through large Public Sector Enterprises such as Pakistan Steel, PIA etc.

P.S: Also see Saiyan's post above. He offered more detail on some of the same points I made.

Obviously the IMF is mistaken in asking for a reduction in defense expenditure as being unsustainable unless the steps you describe are actually implanted effectively. Obviously.

What is your view on the recent mini-budget and the estimated impact on the budgetary constraints? Will that impact be enough to get the IMF to drop the military expenditure reduction conditionality? Another sleight of hand to massage the figures may get a rescue approved, but then Pakistan would be in the same boat as many times before in asking for a waiver for failing to meet its commitments to IMF under the plan.

 

[AgNoStiC MuSliM]

Obviously the IMF is mistaken in asking for a reduction in defense expenditure as being unsustainable unless the steps you describe are actually implanted effectively. Obviously.

What is your view on the recent mini-budget and the estimated impact on the budgetary constraints? Will that impact be enough to get the IMF to drop the military expenditure reduction conditionality? Another sleight of hand to massage the figures may get a rescue approved, but then Pakistan would be in the same boat as many times before in asking for a waiver for failing to meet its commitments to IMF under the plan.

The IMF wants a reduction in the budget deficit one way or another - as a lending institution that is its prerogative - to demand whatever 'fiscal belt tightening' it deems necessary prior to lending money. Obviously the long term solution to reducing the budget deficit is to improve government revenue collection which remains at abysmally low rates, and reducing the defence budget (hypothetically) is not going to do anything more than offer some short term breathing space. The structural issues (small tax base, loss making PSE's and a lack of economic diversification) will remain.

I understand that you have a bias against the Army and want to see it's size reduced, but you have to acknowledge the a reduction in the defence budget is not a long term solution to the structural problems in the economy mentioned above. We'll be back at the same point in a few years without a widening of the tax base.

 

[VCheng]

The IMF wants a reduction in the budget deficit one way or another - as a lending institution that is its prerogative - to demand whatever 'fiscal belt tightening' it deems necessary prior to lending money. Obviously the long term solution to reducing the budget deficit is to improve government revenue collection which remains at abysmally low rates, and reducing the defence budget (hypothetically) is not going to do anything more than offer some short term breathing space. The structural issues (small tax base, loss making PSE's and a lack of economic diversification) will remain.

I understand that you have a bias against the Army and want to see it's size reduced, but you have to acknowledge the a reduction in the defence budget is not a long term solution to the structural problems in the economy mentioned above. We'll be back at the same point in a few years without a widening of the tax base.

Your understanding of any bias on my part is mistaken. We can wait to discuss this further once the impact of the current steps is deemed sufficient to avoid going to the IMF for now. Whether the defense budget is sustainable in the long term still remains to be seen of course, but the past decades' worth of data would seem to indicate that it may not be.

You are correct that without getting the economy going again, it will simply not be possible to afford the expenses at whatever level deemed sufficient. Whether the present setup in Pakistan is geared to allowing and implementing the fundamental changes required to do so is another debate entirely, where again the past record would indicate similarly adverse results in the future.

 

[Mage]

Life in earth is temporary. People are more focused on eternal afterlife.

 

[Tameem]

https://twitter.com/x/status/1088851141558001665