EDITORIAL: The latest Gallup Pakistan Business Confidence Index report only confirms what everybody already knows: businesses are increasingly pessimistic about their prospects because of the toxic mix of “continued political turmoil and the new tax-heavy budget”.
Conducted across 454 small, medium and large businesses from over 30 districts in the second quarter of 2024, the survey also reveals that a big majority thinks, quite naturally, that the present PML-N-led government is a “worse manager” of the economy than its predecessor.
Such things are the stuff of nightmares for sitting governments. Political parties naturally like to play to the gallery when they come to power. But this particular coalition government knew exactly what it was getting into when it fought tooth and nail to grab power after one of the most disputed elections in this country’s history. And it promised it would do whatever it took to sort out the economy, and that it understood there would be blowback.
Yet it’s only been right on one count – the latter. It has unleashed public and business fury, no doubt, but PML-N has been in and around power corridors long enough to expect just such a reaction from such an unfair budget so it would have factored this much in.
It has not, however, even given a thought to what is really needed to help the economy. It has not begun implementing the tough structural reforms that are going to be needed to see the IMF bailout through. It has also not done what was possible to expand the tax net and increase revenue that would have created the fiscal space necessary to get the Fund to tone down its tough “up front” conditions.
And it has definitely not done a thing to check its own expenditures. In fact, just when most Pakistanis are facing the worst inflation, unemployment and tax burdens in their history, the state has treated itself and its employees to higher salaries and more perks and privileges as if to rub salt in the wounds of middle- and lower-income classes that will pay extra pounds of flesh to support this extravagance and keep the IMF lifeline alive.
No wonder businesses see no light at the end of the tunnel. Many of them were struggling to stay afloat even before this budget. High utility costs and high taxes have already rendered far too many of them unviable and exporters uncompetitive in international markets. Now they must pay even more under even more tax and tariff heads just because the government will not trim its own excesses nor tax high earning sectors that are politically connected to it.
It’s clear that this government either did not really understand the depth of the financial crisis or simply didn’t mean what it said when it made the “whatever it takes” promise. Because this is not like the old times, when governments would force unfair policies down people’s and businesses’ throats and keep going around the same circle. Now the people have reached a breaking point. Many of them cannot afford to pay their utility bills even now. How will they survive when the EFF’s (Extended Fund Facility’s) conditions inflate them another 40-50pc, and more as the programme rolls on?
Does the government have a contingency plan for large scale business closures, which is what will happen if their fixed costs keep rising astronomically, and subsequent spikes in unemployment and poverty? These questions need urgent answers. Yet it doesn’t seem that a government that is still busy dipping its beak in the treasury would have thought this far. So it’s not very likely that the next Gallup survey would bring any better results.
Copyright Business Recorder, 2024