EDITORIAL: Prime Minister Shehbaz Sharif has set up a nine-member committee under the chairmanship of Defense Minister Khwaja Asif, to suggest pro-poor and public-friendly measures in the budget 2023-24 with no representation from the Ministry of Finance.
While this may be an attempt to engage with the growing number of Finance Minister Ishaq Dar’s critics within the cabinet, who reportedly have expressed serious concern at rising inflation (with sensitive price index of 45.49 percent for the week ending 25 May 2023 which, as per economists, is understated given the widening disparity between the wholesale price index and the consumer price index) and unemployment (evident from the negative 5.6 percent large-scale manufacturing sector growth rate for July-February 2023 with negative 11.6 percent in February), the two indicators with direct implications on the electoral fortunes of any government, yet the paramount position enjoyed by Dar within the party accounts for many dismissing the committee as an eyewash.
The finance minister’s persistent criticism against the International Monetary Fund (IMF) for the still pending ninth review, with his recent claim that the IMF is not doing Pakistan any favours is a reflection of his failure to keep abreast of the evolving policies of the Fund; and his dismissal of criticism from the internationally renowned economist Atif Mian on grounds that theory is distinct from practical economics will find no adherents as his penchant for implementing flawed policies continues, including controlling the interbank rupee dollar parity that cost the economy around 2 billion dollars in lost remittances July-March 2023 in comparison to the year before (as it energized the illegal hundi-hawala system after its almost complete shutdown during the pandemic-related lockdown), and subsidising electricity to the rich (exporters) at the expense of the common man, which did not increase exports as intended.
Reports suggest that ‘Q block’ remains focused on raising revenue from existing sources rather than from widening the tax net to usher in a more fair and equitable tax system than at present – a focus that reportedly may entail taxing the corporate sector business assets and reserves which will further reduce output with a consequent negative impact on employment opportunities and widening the withholding tax on consumer items, an indirect tax whose incidence on the poor is greater than on the rich, payable by filers and non-filers (thereby legitimizing the non-filers).
To get any leverage with the Fund and appreciation from renowned economists would require a mindset as well as some understanding of basic economic theory that appears to be missing in the Ministry of Finance today.
Reports indicate that the decision-makers are no more than a handful of Dar loyalists fully cognizant of his virulent opposition to his policies and that an attempt to point out better alternatives leads to quick dismissal and/or transfer. Be that as it may, Pakistani finance ministers, including Dar, have established advisory committees/councils with membership offered to those who are most publicly vocal in criticising his policies and proposing alternates, with the intent to silence them rather than to actually accommodate their suggestions.
The nine-member committee set up to suggest pro-poor measures would focus on raising the allocation for Benazir Income Support Programme (a usual practice since it was established), and raise food and utility subsidies (which our extremely narrow fiscal base will be unable to support).
The truth is that, as matters stand now, there is absolutely no silver lining on our heavily overcast economy today and it is time to enlist the support of experienced individuals with impeccable credentials to steady the floundering economic ship and steer it out of present economic morass that it is entangled in at present.
Copyright Business Recorder, 2023
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