The Cabinet, it has been reported, has decided to request the World Bank and the Asian Development Bank to undertake a needs assessment of the flood damage to ensure credible and authentic statistics that maybe more acceptable to the international community.
This was considered imperative in the light of the Prime Minister's plea to the international community, seeking assistance for a disaster whose scale has been defined as greater than the tsunami, as well as the earthquake. The decision, seeking international agencies to carry out a needs assessment, was also almost certainly an outcome of growing concerns, domestically and internationally, that poor governance remains a major stumbling block to aid effectiveness in this country. It is indeed a sad state of affairs that the major victims, due to the floods, the vulnerable, are being indirectly penalised by the world community for the numerous scams that have been the hallmark of the present government.
The time to clean house has come and gone and there appears to be little effort to combat the menace of poor governance that has not only compromised our ability to generate adequate support for our fight in the global war on terror, that has cost the nation lives as well as assets that we can ill-afford, but also rendered our executive branch of the government so insensitive to allegations of corruption that it blithely recommends such an assessment be carried out by others. Contrast this with the Indian response to British allegations of misuse of their aid money - allegations, which led the Indian government to refuse to accept the announcement of any funding/assistance by Cameron during his recent visit to India. To add insult to injury, the present bunch of government supporters are citing foreign support for flood affectees as a measure of the success of President Asif Ali Zardari's highly controversial two-nation, ten-day tour.
Be that as it may, the scale of the disaster is unprecedented, not only in our history, but also in the world's recent history. There is simply no way any government could have been able to meet the needs of the affected people, even a government that was not on an International Monetary Fund programme. Support from external resources is, therefore, critical to easing the lives of the growing number of flood affectees. However, economists are worried about the tranche release by the IMF under the programme, which was linked to meeting the October 1 deadline for implementing the reformed GST, or more accurately the levy of value added tax, the elimination of the inter-circular debt and subsidies. The IMF has reportedly stated that the government is unlikely to be able to contain the budget deficit as agreed, and forecasts for the current year place the deficit at the unsustainable level of 8 percent, well in excess of what the present government inherited in 2008.
While there is little doubt that the IMF maybe compelled to revise the deficit target upward, yet a maximum of two tranches are left to be released and the IMF would certainly be reluctant to release these tranches and lose all its leverage with Islamabad. Thus, it is not yet clear what will dictate IMF policy in this regard but it is certainly imperative for the government to begin to undertake some in-house measures that must include raising revenue generation capacity and reducing its current expenditure. The Finance Ministry, according to a Business Recorder report, has not begun considering a mid-term budget yet, the urgent need of the hour. It is hoped that the subsidies to prop up white elephants, estimated at over 300 billion rupees, be the first ones to be diverted to the flood victims, followed by higher taxes on the rich.
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