EDITORIAL: These are not the old days; especially when it comes to the economy and the government cannot hope to get away with well-timed, politically correct, yet quite hollow policy statements. Take the finance division’s notification about “austerity measures”, for example, with its superficial measures like temporary bans on new cars and medical treatment abroad, etc.; almost as if the government itself does not realise two very important points.
One, such things will make the headlines, of course, as any directive coming out of the government does, but they will not even begin to scratch the surface of the many, completely unnecessary imbalances in the current account, which exist only because of the extravagance of those in power.
And two, the people, most of whom have had and are having to pay the proverbial pound of flesh in taxes, tariffs and inflated bills only because of the government’s incompetence, understand such tricks very well now and will have none of them.
They also suspect, and very rightly so, that even these cosmetic measures will at best be implemented for a very short period of time; maybe till the media is forced to look elsewhere for its business. And whatever budgetary shortfalls come into play will have to be made up for, once again, by ordinary people. And so, just like the promise about equitable, across-the-board taxation turned out to be hot air, there seems no real seriousness in the claim about official belt-tightening either.
Surely, the finance minister, trained in the cold profit-loss calculus of international finance, understands that all leakages will have to be plugged for the economy to survive without life-support. Just the other day he said the upcoming IMF programme would be the country’s last one provided “we bring structural reforms”.
Yet there’s no real sign of the kind of reforms that are needed, nor the intention to implement them, when time comes for rhetoric to turn into concrete policy. We saw this at the time of the budget, particularly when it came to taxing big, traditionally protected, sectors. And we’re seeing it again when the government needs to cut its own big budget.
Sooner or later, though, everybody will have to realise that the perks and privileges that the government showers on itself are not sustainable. Sadly, it seems those in power are bent upon learning this lesson the hard way. Already there are rumours that the delay in the EFF (Extended Fund Facility) owes to the government first agreeing to the Fund’s conditions and then not implementing them properly.
It’s impossible to know for sure because all that comes out of the finance ministry is the all-is-well line, but the delay is now raising very serious questions and there seems enough in the government’s own actions for people to start putting two and two together.
The situation demands far greater seriousness. Could it be that the government has forgotten how close the country came to default just last year, when the previous EFF was suddenly suspended? Or how failure to secure the next lifeline will most definitely plunge us into a similar situation? Do they really feel this is a temporary inconvenience and they can still go on with business as usual?
There is still a chance for the country to ride out this storm. But, as the finance minister himself explained, that would require “bringing structural reforms”. Without those reforms, this EFF – which should officially start soon enough – will stall, just like before. And then all bets are off. It is, therefore, necessary for the government to check and cut all sorts of waste. It is shocking that it has still not realised this fact. It does not have very long to get its act together.
Copyright Business Recorder, 2024