The parting kick?

In an editorial about the "long march" on Islamabad, and the approaching (really?) general elections, The Economist said the "transition would be historic: never in Pakistan's violent and unstable history has an elected leader served a full term and passed power to another."
Indeed, this transition would be historic, but there are other reasons too that make it historic; it will also be first time in the history of Pakistan that, after rendering the state virtually bankrupt, and weeks before ending its term, an incumbent government began announcing 5-year reform programmes.
It promises to build the Iran-Pakistan (IP) gas pipeline, bolster exports, attract $5.5bn FDI annually, setup an Exim Bank, a Land Port Authority, subsidise setup of food processing plants, build wind power projects and mass transit systems, and revise Public Sector Companies Rules.
But the government doesn't explain where the $1.5 billion needed to build the IP gas pipeline will come from, though the pace at which official exchange reserves are falling foretells a likely default on repayments even to the IMF under the current Stand-By Arrangement (SBA).
Islamabad High Court declared even the Gas Infrastructure Development Cess (levied much earlier to gather funds for ground work on the IP gas pipeline project) as illegal, unconstitutional and violative of fundamental human rights because the decision to finance the project was taken in January 2013.
Since 2008, the annual fiscal deficit was contained by massively slashing the Public Sector Development Plan; the FY13 allocation therefore is now being used to finance projects with marginal utility to popularize the re-election campaigns of coalition partners' sitting parliamentarians.
The Strategic Trade Policy Framework (STPF) for 2012-15 envisages exports during this 3-year period to add up $95bn. Besides other concessions, the STPF proposes mark-up rate of 1.5 percent on finance to selected export sectors, and 2 percent on (export-related) project finance.
The proposed lowering of mark-up rates for the export sector is an election gimmick because there is no indication where such cheap funds will come from. It implies a subsidy, but with the present flawed taxation system, funding such a huge subsidy is impossible.
The STPF includes fifteen other initiatives wherein, even those involving regulation and trade promotion, require financial outlay on setting up institutions in Pakistan and abroad, funding their annual expenses, and finding staff with requisite qualifications and experience.
The proposed setup of Exim Bank and Land Port Authority, are ideas floated long ago by sector experts; not implementing them is unforgivable because there absence made the trade scenario worse due to consequences on trade and BoP deficits.
In FY13, the amount requested by the Commerce Ministry to implement its 2012-15 strategy was Rs 60 billion, which was then slashed to Rs 26.2 billion. By the end of FY 13, the fiscal deficit could touch 7 percent of the GDP. Then, where from will these 15 initiatives be financed?
Pakistan is the sixth largest producer of fruits. Yet, we couldn't develop the capacity to preserve and process fruits, though nearly 40 percent of this crop rots every year. Pakistan is the fifth largest producer of milk, but the infrastructure gaps existing in the fruit sector, also impede producing processed dairy products.
The 50 percent subsidy (it on plant value, or on mark-up on project loans?) for meat, fruit, vegetable, date and olive processing plants in Balochistan, Gilgit Balitistan, Fata and Khyber Pakhtunkhwa, is welcome but these projects deserved state assistance throughout the past decades.
Last month, while launching Pakistan's first 50MW wind energy project of the Fauji Fertiliser Corp, the Federal Minister for Water & Power promised that 45 wind power projects with a capacity of around 3,200MW are under process, and would be completed in the next '10 years'.
He admitted that the Gharo-Keti Bandar corridor alone has the potential for generating 50,000MW from wind power. Isn't it sad that it took the incumbent government five years to 'think' about preparing a comprehensive plan to change the energy mix for generating cheaper electricity?
The fact is that economic analysts had pointed to this potential on the hundreds of miles long Mekran coast, and Thar and Cholistan deserts, well before the current economy decapitating oil price hike began. Several papers on this subject were published as early as 2006.
Khyber Pakhtunkhwa Minister for Transport says that, so far, ADB has approved only a "pre-feasibility report" for a mass transit system in Peshawar (worth $0.372bn); consultants (still to be hired) will finalise the report by June 2013. Some progress in five years, isn't it?
The biggest of these reforms comprises revolutionary changes in regulatory practices in state-owned enterprises (SOEs) whereby SOEs shall now elect chairmen of their Boards from amongst 'independent' directors, and they will not interfere in day to day affairs of the SOEs.
The aim is to achieve an appropriate balance of power, tougher accountability, and improve the Boards' capacity to exercise independent judgement. By January 2015, forty percent of SOE Boards of directors shall comprise 'independent' directors, and by 2017 they will form the majority.
Weren't these changes important all along, or has the virtual bankruptcy of the SOEs finally forced them? That mismanagement was leading the SOEs to this end was no secret, then why the delay in corrective action by a government that claims good governance?
The use of solar energy is still not on its list. Carl Pope, an environmentalist and an expert on energy, recently disclosed that over 10 million households in Pakistan are without electricity, and spend around $0.750bn a year on buying kerosene for lighting.
According him, for $1.2bn (about 18 months' kerosene bill) all such homes could get a solar panel whose payback period could be 18 months if the system suppliers were repaid regularly. Years ago, India helped over 25 percent of it households achieve this changeover.
PPP-led coalition implemented none of these reforms in its 5-year term, nor can they be implemented by Pakistan in the state in which this government has placed it, but are enough to fault the post-election government (which The Economist predicts may be headed by PML-N), and ensure continued political instability. That seems to be the PPP's parting kick.
Due to sustained neglect of all these issues, Pakistan now has a huge youth population with meagre or no education at all. For decades, due to economic mismanagement and diplomatic failures, the Rupee kept depreciating, which prevented BMR in the industrial sector. The last five years were worst in this track record. The industrial sector has lost its competitive edge but we have advantages that continue to be ignored - huge untapped potential for hatchery, animal husbandry, dairy farming, and milk and fruit processing that don't require too many Bachelor and Master's degree holders. For these sectors too, the "Peoples" party did nothing.