There is quite inexplicably intense debate on the date for the next elections in spite of repeated statements by several federal ministers close to the PPP Co-chairman that they will complete their term to the day. In other words, the current parliament is expected to remain till the 18th of March.
The end of the term would be followed by the installation of a caretaker set-up on which, as per Chaudhry Nisar Ali Khan, Leader of the Opposition, consultations with parties both within and outside parliament have begun. Chaudhry Nisar indicated that as required by the 20th Constitutional Amendment, the names of two former judges have already been shortlisted. And while informal sources reveal that talks between the two major parties have been ongoing for a while on the matter yet there has been no definitive response from the PPP leadership on this matter.
There is one element in the possible timing of the elections that has so far been ignored by parliament as well as by the parties that currently are outside parliament due to their decision to boycott the 2008 elections: the fiscal year ends on the 30th of June and the federal and provincial governments may no longer be authorised to make payments on 1st July till a budget is formulated and approved. Once the caretaker set-up is in place on March 19, 2013 elections would have to be called within 90 days. However, there are three sectors which may require immediate remedial measures which a caretaker set-up may not have the mandate to formulate or implement: the economy, energy (electricity and gas) and law and order.
The budget for next fiscal year is important because all major macroeconomic indicators are a source of major concern at this point in time, a concern that is likely to deepen with the election-related increase in expenditure which would lead to an unsustainable fiscal deficit of over 8 percent this year. This is higher than what the PPP government inherited in 2008 which compelled it to accept politically challenging International Monetary Fund conditions - conditions which a caretaker set-up should not be empowered to accept on behalf of the people of this country. And yet if there is a need to go to the Fund, as is the consensus amongst economists, then a delay of three months - the duration of the caretakers - may push all key macroeconomic indicators towards unsustainability, making the task for the next government that much more difficult.
Thus the critical question is whether it is possible for the next government to formulate a budget to meet the June 30 deadline. There is little doubt that the Finance Ministry officials, privy to details of expenditure requests and revenue generating capacity, would be able to provide broad parameters of revenue and expenditure for the next fiscal year. But this data would be useful in determining the supplementary budget which is essentially the increase from the budgeted expenditure allocated for the year and a decrease in the budgeted revenue collections. To complicate matters would be the opposition's concern that the bureaucracy is politicised - a charge that is strengthened by the fact that Wajid Rana, upon his reaching retirement age, was reappointed as the de facto Finance Secretary for another year and he may therefore not be acceptable to other parties.
Analysts maintain that it is the bureaucracy that formulates 85 percent of the budget - a contention premised on the lack of flexibility of who ever is in government to interfere in allocations for defence, interest payments and principal amount due for both foreign and local loans, and salaries/pensions. In 2010-11 the total allocation by the end of the year for interest and principal due on foreign and local loans was 980.7 billion rupees, defence allocation was 510 billion rupees and civil service salaries accounted for 215.6 billion rupees giving a grand total of 1706.6 billion rupees. Total federal government expenditure for the year was 3109.7 billion rupees or around 54.8 percent of the total expenditure of the government (including current and development expenditure). This implies considerably greater flexibility on the part of the political government especially if a political party intends to dramatically change its expenditure priorities by significantly reducing subsidies to the power sector and bail out packages to the state owned entities. To allow a non-representative caretaker set-up to present a budget would, without doubt, lead to a mini budget shortly after the induction of the next government which may renege on loan conditions. In this content, it is advisable that a skeleton consensus budget be prepared, and discussions on the caretaker finance minister be as intense as those for the prime minister, as it would require immediate ratification by the new parliament or preferably to hold elections by the end of May to enable the next government time to follow its economic vision.
The second major area of concern is energy and in March, with the onset of summer imminent, loadshedding is likely to begin peaking again. Would the caretakers resort to the necessary power sector reforms (inclusive of electricity and gas) through eliminating subsidies, increasing recoveries as well as reducing losses that would require reappointments in the sector? If not then what policy would they follow? The existing policy is simply not tenable and any Water and Power Minister committed to improving the performance of the sector has to change policy dramatically.
And finally law and order. Currently several parts of the country are in the grip of sectarian/ethnic/Taliban related violence. Key decisions in Taliban active areas and Balochistan are widely known to be taken in GHQ however the government is at present grappling with the law and order failures in Karachi through essentially periodic operations that end as inexplicably as they commence. The nature of the conflict is well understood by the principal political actors in the city however four and a half years down the line violence remains a fact of daily life of the hapless Karachiites - be they traders/wholesalers/ bankers/industrialists or indeed the poor man on the street. A caretaker interior minister, provincial and federal, maybe compelled to take action that has not been supported in the past by the key political players of the city. It would therefore be politic to evolve a consensus on what a caretaker interior/home minister can be allowed to decide and/or who is to lead the ministry - both at the federal and provincial levels.
To conclude, there is a need for the government and the opposition to discuss and agree on names for caretaker ministers of finance, water and power, petroleum and natural resources and interior. It is unfortunate that so far there has been no discussion on this matter even though these ministries would require remedial measures on an immediate basis.