In God we trust

It has been three weeks since the 'victory speech'. It was like a badly needed shot in a despairing Nation's arm. Most, if not all, agree Imran should be given a fair chance. 'Time to line up in unison and support' is the predominant sentiment.
Imran has promised us good governance (founded on rule of law, meritocracy, open government, and accountability), a welfare state (modelled on state of Medina, conjoined to Scandinavian and Chinese templates), and a proactive foreign policy (an open border with Afghanistan one day, two steps to one of India's, hand extended to the US if it takes it).
We do not wish it to rain on Imran's parade. We trust him. He is the pahalwan from our pit. We should not rush to judgement if some troubling signs are beginning to cast a shadow. He is not in the saddle yet. Let us give him the benefit of doubt and hope his compromises are for the 'greater cause'.
Imran has drawn some flak for his choice of Chief Minister KPK, when from all accounts a more meritorious candidate was available. His dithering over the cabinet caused a few eyebrows to be raised: is intra-party jostling too much for him to handle, despite his decidedly authoritarian leadership style? Was the nomination for Speaker of the National assembly the best choice available?
The only horse out of the stable is the very able and highly articulate Asad Umar, who has thrown all pretense to the winds and is very much acting Finance Ministerial, even before he has stood up in front of Mamnoon Hussain to proclaim "I, Asad Umar......". He is also sounding supremely confident.
And that worries us.
His solution to the ailing, and hugely expensive to carry, state enterprises(SOE) is the creation of a sovereign fund (SF)that will insulate them from the mischief of line Ministries and allow them to be run professionally until they are good enough to be sold off.
SF/Holding Company for SOEs is not a 'naya' idea. It has done the rounds but couldn't fly. Also, we have heard the "make them privatisable first" jingle before. After all the years, and throwing lots of good money after bad, we have only made them less 'saleable'. We will wait with bated breath for Asad's SF to perform the magic.
Typically, sovereign funds, a tribute to State Capitalism, are created from surpluses. In our case where are the 'surpluses'? What we have is a 2.5 trillion fiscal hole. If it has to be financed from the consolidated fund (digging the hole deeper) surely there has to be a Minister-in-charge, answerable to the Parliament? Is it possible to snip the umbilical cord tying the Minister to the SF if it is financed from budgetary allocations? What will be the role of the Principal Accounting Officer (Secretary of the Ministry to which the parliament allocates the funds)? Does the constitution allow unbridled autonomy (SF's raison d'etre) to a body funded from public funds?
Incidentally, why can't you trust the line Ministries if good governance and meritocracy are your leitmotifs? But Asad is an honourable man, and we have no reason to think he has not done his homework. Indeed, it is we who have every reason to feel diffident in probing the strategy.
Asad is reported to have said he will not reverse Miftah's tax cuts (highest income tax slab of 15%). He also wants to do away (rightly) with most of the withholding taxes. Bringing the fiscal deficit down to below 4.5% of GDP, without an increase in tax rates, is going to be quite a challenge, but we are sure he knows what we don't.
More fundamentally, how would he reconcile the income tax cap of 15% with his boss's promise of 'more from the rich', as in Medina, or in the Scandinavian countries where the rich part with up to two-thirds of their income to finance the welfare state? Are we in for some surprises here? New levies hitting the rich -wealth tax, serious application of agricultural income tax, penal taxes on the amnesty-wallahs? Or rooms reserved in Serena hotel for the dubious ultra-rich?
Asad has consistently, and rightly, taken the previous governments to task for all the loans they have racked up. We are a little mystified then when each one of his 'all options on the table' translates into borrowings, whether from KSA, China, diaspora, or the IMF and multilaterals. Are we missing something here?
We applaud the Kaptaan when he talks about social justice and pulling people out of poverty, often quoting the example of China. Well, China did it on the basis of some thirty years of consistently high growth, mostly double digit, with some draconian measures to boot!
No serious economist is projecting high growth rates for us over the short-term. If we can't post at least 7% growth each of the coming five years what is the point of sending a team out to China to learn the science of poverty alleviation? If the Kaptaan is serious about pro-poor, there is no way around redistributive policies. Did we hear someone whisper land reforms?
As we averred in an earlier column, the joker in the pack is foreign policy. It is foreign policy - how we balance our relations - that is going to determinate our economic fortunes. A clean and competent government is going to help but can't be enough. Even if we give credence to the hollow slogan of 'trade not aid', we are not going to make a breakthrough in Exports without a supportive external environment. Someone on a stretcher can't pick up fights!
Symbolism - austere life style of the leaders, appurtenances of a dream team, accountability cascading down from the top - is the stuff hopes are built on. But you can't have gestures for dinner. You can fudge figures but you can't hide reality from the man who can't find a job, knows the price of onions, and fights illness with spurious drugs.
We pray people in whom we have reposed trust deliver victory, not just declare it. Their plans should unfold soon, and that will give us an idea of how our fortunes will change. Meanwhile, in God we trust; and hope for the best from His viceroy on earth.
beghot2@gmail.com