M.A. Niazi All the governments of the federation, that is, the central and all four provincial, have fulfilled their basic function, that of presenting a Budget for the next financial year, thus enabling the five treasuries not only to pay their employees, but also all those who want money from them, whether it be contractors for development work in a remote rural area, or a petrol pump which needs to be paid for the fuel going into a ministerial vehicle. The budget debate has only just started, but the Budget is supposed to be the main method of accountability in our constitutional scheme, as the elected representatives of the people decide whether or not to provide the government they have installed the money they need to carry on for that year. The taxation will continue under the Acts, or Ordinances, but the Finance Bill consists of amendments which the government is making to these pieces of legislation either because it needs more money for its purposes or because it wishes to rationalise certain taxes. The Budget consists of a statement of accounts, department by department, and in great detail, both of revenue and of spending, for the year just past, and the one which is about to begin, a series of demands for grants to various departments by the president or the governor, as the case may be, as well as a speech, which is supposed to be a statement of the philosophy behind the Budget. It also contains a number of commitments by the government to certain courses of action. Politicians thus think that making this speech is the real job of the finance minister, and the fact that the speech also carries responsibility for the rest of the Budget is what makes the job unattractive enough for political governments to be forced to have the speech, arguably the most important of the entire year, even more than the one on the president's speech, read by a minister of state, rather than a minister. Though at the federal level this was mainly because the finance portfolio was supposed to go to the PML-N, and Shaukat Tarin holds it as a PM's adviser without a seat in either House of Parliament, the net result was that the Minister of State, Hina Rabbani Khar, read the speech to the National Assembly, where she sits. There was no element of deliberate choice, such as with Speaker Fehmida Mirza, or much earlier, when Benazir Bhutto became prime minister, making her the first woman to present Pakistan its Budget. However, it made certain that the largest provincial budgets, Punjab and Sindh, were presented by PPP men, Tanvir Asghar Kaira and Chief Minister Qaim Ali Shah respectively, while Tarin, who was behind Ms Khar, was also a PPP appointee. The main thing about the Budget was not how much relief it afforded the people of Pakistan, whose taxes would help pay for it, because there was little relief given. Though the speech tried to present the Budget as people-oriented, the only people-friendly thing it did was provide an increase in pays and pensions. It did not provide the increase demanded by various trade unions, but it implemented some of the recommendations of the Pays and Pensions Commission. More significant was that the Budget found extra funding for defence expenditure. Not only were the military part of the overall pay increased, but their budget was separately increased. Apparently this should be a time of government contraction, what with a global economic crisis combining with a deteriorating law and order situation due to the War on Terror to produce new and unique challenges for government. However, there was much (metaphorical) flag waving during the speech about the military operation, and though there was no specific mention of the proposed cantonment in Swat, that had already been announced by the president. It is worth noting that the armed forces get substantial increases under civilian dispensations which succeed military ones. Thus the present increase, from Rs 296.077 billion to Rs 342.014 billion, represents not simply the increase normal under a PPP government, but that normal after a lifting of military rule and transfer of power to a civilian government. This represents the government's attempt to placate the military. However, if past precedents are any guide, this does not work. Though the only PPP government to be directly toppled by the military remains that of Zulfikar Ali Bhutto in 1977, the ousters of the Benazir Bhutto governments by presidents under Article 58-2(b) in 1990 and 1996 had the approval of the military (as did that of Junejo in 1988), and the Nawaz dissolution of 1993 was forced by the military. Under military rule, budgets are made and passed without recourse to any Parliament, and contain increases. However, the motive for military rule is not centred around the military budget, but is about the exercise of power, and access to other state resources. However, the real reason for the increase has been the War on Terror. The War is funded partially from abroad, but the provision of money for the coming financial year implies that the military not only does not see the War as ending this financial year, but sees it as needing further expenditure. This brings one to the vexed question of the Friends of Democratic Pakistan funding upon which reliance has been placed in the Budget, even though all that the Friends made were pledges, which are not always honoured. Much of the increased military spending is to be met from funds expected to come in from abroad for this purpose. The Friends money, if it does not come in, will be met by an IMF loan, which Mr Tarin said at the post-Budget press conference was already lined up. This does beg the question of whether the real reason of the recent negotiations with the IMF leading to Pakistan declining a further loan was that the loan was merely put off to the future: in short, next financial year, when some Friends proved they were not such great Friends after all. The present government will not be allowed to default. It is too important to the War. Thus far, the IMF is the agency the USA is using to avert that default. It is also making sure that the government does not use its traditional tool to cut spending: reduce development spending, including the Public Sector Development Programme. Fixed at Rs 803 billion this year, it will barely stimulate the economy, and that is at the most optimistic. Though the remarks of the PM's finance adviser indicate otherwise, the Pakistani economy is by no means out of the woods that the whole world finds itself in. This development spending must be protected, and it is for this that the IMF loan will be required. The IMF has promised another $4 billion, which would provide about Rs 300 billion, which should help provide sufficient protection to the coming year's PSDP. Protecting it is something that only the federal government can do.