The Pakistan People's Party ministerial team led by Finance Minister Dr Abdul Hafeez Sheikh has completed the first round of talks on an economic programme with all the major political parties in the parliament. Obviously, in their public posturing, all sides have to stick to their respective positions in relation to country's economy and one hopes that they would recognise economic realities and not let political expediency prevail since this lies at the very root of the economic mess which is hurting the nation more now than ever before.
While the role played by PML-N chief Nawaz Sharif in initiation of the dialogue needs to be generously recognised and whole-heartedly appreciated, his team requires to refrain from point-scoring. His men are strongly required to place sound alternatives to the economic programme the Finance Minister laid before the parliament in his budget speech. Dr Sheikh and his team of technocrats cut a sorry figure because their menu of fiscal and name changing proposals had not met much success.
The blame for this lies squarely on the President and the Prime Minister for not giving their full backing to the FM to overcome resistance from his own cabinet colleagues until now. The agreement to hold talks with other parties stems more out of fear of losing majority in parliament, than any serious study of the economic realities.
Finance Minister Sheikh had boldly asserted last June that not a penny of taxpayers would be given to bail out the loss-making public sector white elephant. The pledge did not get traction because the PPP leadership is not willing to corporatize these loss-making entities as it wants to retain the power of giving jobs and holding complete sway over promotions and postings in these notorious entities.
The then Finance Secretary, Salman Siddique, had obtained consent from various professionals and experts from the private sector willing to undertake a national service months ago. Prime Minister's assent to the FM's proposal is still awaited. President Asif Ali Zardari perhaps firmly believes that his knowledge and expertise in tackling economic issues and operating all kinds of businesses is second to none.
Although, it is widely recognised that President Asif Zardari has better understanding of economics and finance than the Prime Minister who is always found effusing warmth and friendliness, the president's way of working is the same as that of his predecessor who also held closed-door sessions with his ministers and advisors and also interacted with leaders from trade and industry.
Only then would bold decisions that had preceded such parleys be announced with some gaudy display. Unfortunately, however, in most cases they were hardly ever implemented. In the eyes of outsiders, those decisions from the top were lost in the bureaucratic rigmarole because of a lack of observance of the processes defined in law, regulations and rules of governing the state.
The present governmental processes look archaic and time-consuming, but as long as they are on the statute books, any violation of them under the present environment could land the 'irresponsible' officials in court, even jail. Making a summary for approval of a transaction or for policy formulation involves various ministries, Ecnec, CDWP, the Cabinet or its Economic Co-ordination Committee.
Therefore, former prime minister Nawaz Sharif's assertion that his 10-point economic agenda is doable in just 45 days appears to be highly unrealistic while Finance Minister Sheikh's desire to avoid fixing a deadline sounds quite plausible. But perhaps, an economic programme agreed upon with timelines can be adopted in 45 days only with strong consensus, which undoubtedly, is the need of this hour.
Everyone needs to accept the reality that the country's economy is in turmoil at this point in time and therefore requires just not an analgesic for instant, albeit temporary, relief but also a massive surgical procedure as an effective and appropriate response to the present major depressive disorder aggravating the disease.
The principle of equitable horizontal taxation and increasing vertical load needs to be adopted. The taxpayer cannot be asked to pay more unless those who enjoy exemption also express their willingness to bear their due share of the burden. Concurrently, the size of the government at all three levels needs to be slashed. The Finance Minister has limited options. Debt servicing has already risen to a backbreaking level. Fresh loans for debt servicing need to be avoided as much as possible. The second major spending item is defence.
A drastic cut in expenditure under this head would be extremely difficult because of a variety of cogent reasons. In the ultimate analysis of the situation it is the political leadership which needs coming to grips and evolve a common agenda - economic, political and social - as they did in relation to the 18th and the 19th Amendment to the Constitution.
The country needs a futuristic and dynamic economic programme from the political leadership without any further loss of time. President Zardari needs to reciprocate PML-N chief's profound gesture of support to government's efforts towards the greater cause of country's economy by allowing the Finance Minister to overrule his party leadership, tax all kinds of income and overcome the hesitancy in his party from having an arm's length arrangement for managing all the PSEs by freeing them from the gridlock of line ministries and to be run professionally as private sector enterprises.
The political leadership, on both sides of the aisle, has to accept that the economic programme agreed between them has to be within the framework agreed with the International Monetary Fund. State Bank of Pakistan can print rupee currency notes, ultimately leading to hyperinflation, but not a single dollar.
Without adequate forex reserves a profoundly energy-deficient developing country like Pakistan cannot survive because crude and edible oil alone constitute more than 60 percent of its overall imports. At the same time, the technocrats involved in the talks will be required to present the bare facts and challenges truthfully.
They must be willing to speak up forcefully and also put their dissent in writing if unrealistic proposals are being accepted. Let us avoid the problems facing us after the 7th NFC Award, the 18th Amendment and promises made to the Fund. The way forward is to set the direction of a compressive economic roadmap with realistic time-lines for every item agreed upon. A dialogue with stakeholders in the economy would also be desirable as an agreed plan ultimately has to be sold to them with minimum resistance. Crying once the horses have bolted the stable would not do.
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