The new budget will be announced today with new targets and plans to revamp the economy. The finance minister will justify his government’s economic performance by enumerating billions of dollars it could procure from international lending agencies and not to forget the largesse doled out by Saudi Arabia that assisted Senator Ishaq push up the sliding rupees versus the dollar. All said and done, the budget speech could be painted bright, but the dull, insipid and lacklustre ground realities cannot be concealed by fine oratory. The government had set ambitious target in its first budget last year; none of them could be achieved. Areas where the government could post positive figures, such as large scale manufacturing, mean little amidst the economic weeds spoiling the field at large. PML-N government’s developmental approach to the economy, hinging centrally upon infrastructure development, misses the intricacies that would eventually turn these mega-projects into more bleeding ulcers in the large reservoir that we already have in the name of public sector organisations, etc. Building power houses would be useless if power theft, transmission losses and governance of the energy sector is not overhauled. We are not short of electricity; we are short of revenue to do in the circular debt feeding on power theft and resource irregularities. The relentless approach to collecting taxes, with no immediate solution to net the big fish, most of them sitting as legislators in parliament, cannot be compensated by any amount of foreign or domestic loans. The government is sitting on $ 60.9 billion foreign debt. The crowding out effect, whereby the banks are financing the government, has weakened the private sector, already shy of investing because of multiple domestic shocks in the name of terrorism, law and order and the power crisis. According to the Economic Survey of Pakistan released yesterday, the investment-to-GDP ratio has declined from 14.6 percent to 14 percent this year. The target was to take it up to 15.1 percent. Private sector investment declined from 9.6 percent of GDP in 2012-13 to 8.9 percent in 2013-14. In this atmosphere, even the best business schemes for investors will be vitiated because of structural flaws emanating from consistent power outages and the security and law and order situation. Economic stability cannot be achieved through external borrowing. The biggest chunk of the budget goes into debt servicing, the rest is disproportionally divided among defence, education/health and developmental works. Pakistan is one of the worst countries when it comes to collecting tax. It has a tax-to-GDP ratio hovering around nine percent. Only just over one percent of the country’s population pays income tax. Therefore, without improving the structural flaws, mega projects will only strain the exchequer. *