Pakistan's rumour factories were churning out varied versions of a new coalition the PPP was trying to fudge to avert the likely rejection of the FY12 Finance Bill and PPP's exit from power. Ignoring the backlash of the move, the Chaudhrys of Gujrat have agreed to join the coalition but many in their party abhor the move.
Despite being opposed, this coalition has emerged but, simultaneously, yet another Muslim League faction (larger than PML-Q) may spring out of the PML-Q. Should this occur, PPP's Chaudhry-backed coalition could fail in its objectives - passage of the FY12 Finance Bill and PPP's remaining in power.
The massive reshuffle in the state bureaucracy and SOE top brass was an attempt at luring the PML-Q into the new coalition to compensate for the loss of support from MQM and JUI - parties that suffered the 'benefits' of coalition membership, and lost all hopes of mending the ways of the PPP.
PPP's leadership knows that, to survive its current term, let alone win the next elections, things must change. But why it took so long to realise this? The explanation is that the first three years (possibly four) were meant to enrich the 'jiyalas' and the rest to deceive us all into hoping for the better.
Unlike most Pakistanis, the Chaudhrys of Gujrat - leading the party that PPP calls the 'Killer League' - believe that, given their supportive genius in contriving the NRO, the PPP won't treat them like MQM and JUI; the Chaudhrys aren't bothered about what this coalition will deliver to the people.
The Chaudhrys have enough at stake; their involvement in the Bank of Punjab affair - biggest bank fraud in Pakistan's history - and of Moonis Ellahi in another scam forced them into the coalition trap, and so can't convince their party about the merits of this initiative.
Many in the PML-Q believe that, with the jiyalas entrenched in the administration the theft-driven fiscal deficit won't allow any rational changes. That's why Faisal Saleh Hayat sought PPP's agreement to a 19-point agenda to dilute its reckless exercise of authority. It was some hope. Instead, the agenda was diluted to just 5 points.
PML-Q stalwarts believe that the stolen national wealth can't be retrieved until the jiyalas exit the state and SOE bureaucracies because the priority of the jiyalas remains protecting their kin involved in the well publicized frauds, and with PPP in control, its jiyalas can't be shown the door.
While the bureaucratic reshuffles manifest admissions of the regime's failure in doing anything right, many in PML-Q doubt the sincerity of these efforts as indicated by elevation of Maula Bux Chandio to the Ministry of Law and induction of Dr Asim Hussain into the Ministry of Petroleum.
Soon after being named the Law Minister, responding to queries from press reporters about his qualifications for holding this office, Chandio reportedly asked them whether Dr Asim had the qualifications to become Advisor to the Ministry of Petroleum, or for Chaudhry Ahmed Mukhtar to become the Minister of Defence.
Had he questioned the qualifications of other ministers the reply would have been same. It didn't occur to him that those missing qualifications - capacity and experience - caused the governance failure that the PPP now wants to remedy but won't allow empowering those (technocrats) who possess these qualifications.
The PPP blames the recession for its poor performance. Indeed the recession impacted the economy as did the 2010 flood, but what about the thievery in the state offices that continued unabated alongside these tragedies? The fact is that that thievery made things worse than what they could otherwise be.
That the damage done by thievery in state offices can be undone by reshuffling the state and SOE setups, is a PPP-contrived deception. The fiscal deficit can't be plugged without retrieving the stolen national wealth; resorting to higher taxes alone via the coming budget won't work.
PPP was therefore looking for reckless friends like itself to bulldoze the FY12 budget, whose outlines satisfied only the IMF; they had no other buyers because taxing the already taxed, ignoring the recovery of stolen national wealth, and weak commitments on expanding the tax net could convince none.
Believing that fiscal deficit will contract to 4.5 percent of the GDP in FY11 is self-deception. According to the IFIs, the consistently below-target tax revenue foretells the deficit's crossing 6 percent of the GDP (minus jugglery with numbers as done in FY10). Nor will the deficit contract by 0.5 percent a year thereafter.
The target set for the Tax-GDP ratio (9.1 percent in FY11 growing to 10.3 percent in the next 3 years) is a pace of growth dictated by the limits to further taxing the already taxed instead of expanding the tax net, and confirms that fiscal deficit won't contract.
Yet, the federation refuses to tax income from agriculture although it taxes every other sector. There is no logic for this exception, and provinces, that alone are empowered to recover this tax, won't collect this tax. Reason: provincial assemblies are adorned by those who will have to pay this tax.
But the federation will transfer another tranche of Rs 360bn to the provinces courtesy devolution of authority without obliging them to become increasingly self-sufficient and stiffer accountability over their use of tax revenue. The state of provincially administered sectors depicts the sour fruits of this laxity.
To the saner politicians the feared withdrawal of subsidies worth Rs 229bn foretells greater public anger, because it won't be done rationally. Experience: policymakers remain blind even to basic logic eg forcing a lower rise in the price of diesel (with a snowballing effect on inflation) compared to petrol.
Inflation will keep rising because the Rupee remains pegged to the sliding US dollar, and the Osama Bin Laden tragedy will further worsen Pakistan's country risk. The outcome will reflect on the vision of the government and the SBP who were repeatedly advised to re-order the make-up of the country's exchange reserves, but refused to budge.
Tax revenue target for FY12 may be set at Rs 1.95 trillion. In reality, collection could be higher but only if the tax net is stretched and the already taxed are spared tax hikes to sustain their incentive to continue their businesses rather than migrate to countries with more rational taxation setups.
This distorted set-up, which also ignores tax evasion by most other sectors, portrays negation of responsibility by the provincial and federal administrations. How many politicians (excluding the Chaudhrys of Gujrat, and their lackeys) would risk joining a regime managing the state along the above lines remains to be seen.