EDITORIAL: An oft-cited reason for Pakistani administration’s persistent failure to achieve sustainable development, reflected by the fact that at present the country is on its 23rd International Monetary Fund (IMF) programme, is lack of continuity of policies from one administration to another. While different political parties worldwide have distinct economic agendas to achieve growth and reduce poverty levels through a preference for capitalism, socialism/communism or a hybrid system based on a social security network, yet in Pakistan, the three major national parties, when in government post-1980s, have shown to be on the same page on many economic issues including support for: (i) trickle-down theory or supporting the large-scale manufacturing/farm sector through monetary and fiscal incentives to achieve higher employment levels that would trickle down to the poor employed in their sectors; (ii) privatisation would enhance profitability and generate revenue to be used to retire debt (though overall debt — domestic and external — has continued to rise); furthermore, privatisation has been of profitable ventures rather than loss-making units and the price set without taking the loss of future stream of income by the government into account; (iii) inability to reduce annual budget allocation on some holy cows that have received a steady raise in outlay leading to a steady rise in current expenditure that has accounted for unsustainable budget deficits; (iv) citing the performance of the stock market as proof of a stable economy though those engaged in that market are neither poor nor unsusceptible to government lures; (v) appointing in key positions, be they constitutional or in state-owned entities, not on merit but on the basis of nepotism/loyalty. In this context, it is relevant to note that the Supreme Court in its judgement directed that a committee of individuals of integrity be established tasked to shortlist deserving candidates, however, when such a committee was established in 2013 it dissolved itself as the Nawaz Sharif government proceeded to make appointments regardless of the committee’s recommendations; (vi) a tax structure that has not been able to widen the net and proposed policies are yet to be implemented including those associated with tax enhancement measures with the recent ordinance likely to be challenged in a court of law, as the Federal Board of Revenue (FBR), true to its consistent practice, does not think through what havoc would be wrought on the taxpayers by the measures that it seeks to adopt by way of expediency to maximize tax revenue, at least on paper; (vii) appalling governance in all sectors, particularly in the electricity sector, and influential groups continue to derail the structural adjustments that Pakistani administrations have agreed to in the IMF programmes and fail to implement – a fact that accounts for the current situation where reforms have become critical and compelling.
The fact that Pakistan People’s Party (PPP) governments used State-Owned Entities (SOEs) as recruitment or employment bureaus for party workers and supporters with great abandon, thereby causing the financial collapse of numerous SOEs, including the national airline and Pakistan Steel Mills, cannot be over-emphasized. Insofar as the tenures of Pakistan Muslim League-Nawaz (PML-N) are concerned, the party inflicted some incalculable harm on the economy through (i) the passage of Protection of Economic Reforms Act 1992—a sure recipe for money laundering and tax evasion as it allowed ‘Pakistanis the freedom to bring, hold, sell and take out foreign currency…and to enjoy immunity against any inquiry from the Income Tax Department or any other taxation authority or the State Bank of Pakistan as to the source of financing and use of the foreign currency accounts;’ (ii) an obsession to keep the rupee strong, read overvalued, that destroyed the country’s competitiveness in the export market; (iii) the PML-N government’s flawed logic to borrow from external sources as the rate of borrowing was lower relative to the domestic market without taking into account the fact that the rupee was grossly overvalued; and (iv) borrowing from the commercial banks and increased reliance on debt equity at high rates of return. The PTI administration’s governance remains the weakest among the three and its inability to take import/procurement decisions in time has cost the country billions of dollars – delay in procurement of RLNG, delay in procurement of wheat/sugar, delay in implementation of the agreement with the Independent Power Producers (IPPs), and inordinate delay in getting the corruption/laundered money back into the country, which is a challenging task. The only significant amount credited to Pakistan, 190 million pounds, was after the National Crime Agency (NCA) of the United Kingdom agreed to the settlement with the family of property tycoon Malik Riaz. That amount, however, was surprisingly adjusted by the PTI administration against the acceptance of the offer by the Supreme Court made by the real estate tycoon of 460 billion rupees. Last but not least, it is interesting to note that some of PML-N government’s economic policies are very much alive and kicking during the ongoing five-year tenure of the PTI government.
Copyright Business Recorder, 2021
Comments
Comments are closed.