Thank you and congratulations, Pakistan

What does it say about any person at the helm of Pakistan’s fiscal affairs when the Business Confidence Survey – conducted by the country’s independent central bank – tanks to a nine-month low.

Granted that he or she cannot make changes in just a few months, but inspiring confidence? That should have been fairly easy, especially if you happened to be the CEO of an institution that handled over Rs4 trillion worth of public deposits when you left it.

Instead, what people and businesses got was fear, anxiety, and outright dejection.

Let’s make it easy for Islamabad to understand: the youth – majority of Pakistan’s population – has never been this disgruntled at the thought of being in the country. This year’s August 14 was celebrated, but not in the spirit it deserved. It was to scream frustrations away, to let out anger that has remained bottled up for so long that the glass has now cracked, and yet, its shattering sound has not reached ears in Islamabad.

When Muhammad Aurangzeb, then CEO of HBL, took over as finance minister, there were mixed reviews. There was a group of optimists that thought there might be reforms in the offing. ‘He is not a politician,’ they argued. Some wanted to wait and watch. Another set of people didn’t expect any change. In just a few months, it has become crystal clear who has won.

This year’s federal budget was the government’s chance to show that while it may be a weak coalition, it was willing to take decisions that would earn it a better, stronger, and genuine mandate. What they should have had in mind were the next elections. But who really thinks that far in Pakistan? Clearly, this government takes elections for granted. Shouldn’t it?

But we digress.

Back to when Aurangzeb took charge. His appointment itself was a shift – away from the PML-N’s tried and tested. At the time, there was also a clear priority: a smooth transition from the International Monetary Fund’s (IMF’s) short, nine-month Stand-By Arrangement (SBA) to a bigger, longer, tougher facility. At the time, Aurangzeb did not mention who it would be tougher for, but it was understood.

He also kept insisting that it be called a Pakistan programme, supported and funded by the IMF. These remarks were meant to take ownership of the reforms’ agenda.

Just before the budget, he had also said that there were going to be “no sacred cows”, that there would be pension reforms, and “tax and duty exemptions for former Federally Administered Tribal Areas (FATA) and Provincially Administered Tribal Areas (PATA)” will not be extended. He also said the privatisation agenda was a priority, untaxed sectors would be brought into the net, and that the private sector needed to steer the country’s growth forward.

He also laid stress on documentation, moving to a ‘cashless’ society (maybe there was a pun hidden in ‘cashless’), and that non-filers will be made to pay. All these comments were on the record.

Aurangzeb wasn’t media-shy. He appeared on as many platforms as possible, and very succinctly put Pakistan’s economic problems in perspective. There was clarity in his remarks, and set the stage for the budget.

What happened on June 12, 2024, however, was a different story.

A delay in his budget speech – pinned on last-minute tweaks largely due to opposition – was followed by remarks that didn’t really put a lot of light on the actual measures.

What transpired was a budget that had the people running for shelter. There were taxes on milk, salaries, textile, cement, air tickets, and any other sector where the government thought it could go after. It wasn’t a ‘who pays, who doesn’t’. It was a ‘who pays, and is weak’ versus ‘who doesn’t, but is influential’.

As a result, the tax exemptions – which Aurangzeb had stressed would not be extended in a National Assembly session, no less – were extended for some industrialists in Pakistan’s north.

Capital gains tax, which he said would be raised on non-filers, on stock market investments stayed the same. We all saw the pensions and salary increases for government employees, honoraria for NA and Senate staff, a massive increase in PSDP that has started to come down already due to ‘no fiscal space’, and several other reversals that he had promised. The criticism on a big chunk of PSDP is a story for another day.

All of this is not meant to be an indictment of the finance minister. It is to shatter the myth that a change was around the corner. It is to serve as a reality check that it won’t really matter who sits in the finance minister’s seat – so many have already – and that Pakistan is destined to see more of the same.

Let this writer summarise what these so-called simple taxation measures have done.

They have pushed those on the edge into complete hopelessness. Most of them had crossed over already. All of us have been served a reminder: that Pakistan’s comeback, if any, is still a long way away. Inflation, according to PBS figures, is on its way down and the interest rate is crawling to stay closer.

But the people: they are dejected, robbed of hope (sometimes their belongings as well), and thrown into a state where a way out is either to join the barons or leave. Both routes aren’t that easy. Forget job creation and economic growth coming from the private sector.

And the worst part: everyone knows the solutions, and the way to get there. But perhaps, it serves them that we stay devoid of hope, and basic rights. Otherwise, we may ask for more.

Perhaps, the term ‘Idle capacity’ now has a new meaning. No, not just power plants but also our children, youth, businesses, even the skilled freelancers, and others; a nation of 242 million people, serving only a few.

Copyright Business Recorder, 2024