WE are days away from the budget now and its details are still being worked out. Here is some of what we know thus far. They are likely to announce an FBR revenue target around Rs14 trillion (maybe slightly higher).

Current expenditures are supposed to stay just below Rs23tr, of which around Rs16tr are federal and the rest from the provinces. The underlying primary balance (deficit plus interest expenditures) must remain somewhere near Rs1.17tr.

These numbers will be more or less fixed since they are part of the medium-term framework already worked out with the IMF and released in the last staff report. Whatever space will need to be made for shifting tax and expenditure priorities must be created in a way that does not change these numbers by too much.

Now consider what they will have to do in the budget. First up, defence spending is supposed to increase by around 13.7 per cent, as per the same medium-term framework, which was drawn up before the recent conflict. We will see how much of an increase actually comes now that the resource requirements of the security forces have undoubtedly increased following the war.

Usually the first place to see cuts is development spending. In the current year, for example, development spending was supposed to be less than Rs1tr as per the understanding with the IMF, but the government still announced a federal development programme spending target of Rs1.4tr in its budget last year. But until March, barely Rs309........

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