Summary of "Federal Budget - Why do we borrow from the IMF? | Junaid Iqbal | Ep 1"
In this video, Junaid Iqbal discusses the economic challenges faced by Pakistan, particularly the reliance on loans from the International Monetary Fund (IMF) and other sources. He highlights the country's significant economic potential, being the fifth largest population and a nuclear power, yet questions why it continues to seek external borrowing.
Iqbal breaks down the federal budget for 2023, which amounts to approximately $65 billion. He illustrates that the total income of the government is only 60% of the budget, leading to a budget deficit of 40%. This deficit is primarily addressed through loans, resulting in a cycle of increasing debt. The budget allocations reveal that a substantial portion (89%) is spent on current expenses, such as debt servicing, defense, and civil government, while only a minimal amount (1%) is allocated to development projects that could enhance future income potential.
He emphasizes that the trend of prioritizing current expenses over development has persisted since at least 2010, with development spending declining over the years. This focus on non-productive expenditures has contributed to a slow economic growth rate of 3.4% annually, compared to higher growth rates in neighboring countries like India and Bangladesh.
Iqbal concludes by indicating that future videos will delve deeper into taxation and debt issues, inviting viewers to engage with the content and provide feedback.
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News and Commentary
