It is not only wars and natural calamities or man-made disasters like 9.11 that impact adversely on national economies. Elections too extract a heavy toll from even vibrant economies, what to talk of economies in doldrums like the one being managed currently by the military government of President General Pervez Musharraf.

The local government elections which the military junta in its ultimate wisdom thought fit to hold in phases over a period of nine months( December 2000-August 2001) shook the already recessionary economy to its very roots because the polls were being held at the grass-roots. Every one knows what happened to the economies of the world as well as to the Pakistani economy after 9.11 notwithstanding the sudden jump in the inflows of dole for the services rendered and the room created by three rounds of debt rescheduling.

In fact, part ( no matter how small) of these dole inflows were used up blatantly in the one month long referendum campaign conducted in April this year. And to the economy, this month too was lost. And now, we have entered the mandatory 90 days to the general elections fixed on October 10, 2002. So, for all practical purposes the nation rather than focus on trying to meet the July-September budgetary targets for 2002/03 would get busy in politics in the first quarter of the current financial year. Virtually, as a result, the elections would shorten the current financial year to only 8 months. And in these 8 months the CBR will have to collect as much as Rs457 billion in revenue against a collection of less than Rs400 billion during the 12 months of last year to finance the economy to grow at the rate of 4.5 per cent against the full year performance of a little over 3 per cent in 2001-2002.

This is not to say that we should not have elections. What, however, is being attempted to be brought out here is the fact that the finance ministry while preparing the budget for the current year had totally ignored the impact of three-month long electioneering on the overall economy. And it is not only the finance ministry which has played the ostrich here. Even the IMF seems to have missed the point completely. A review of the report released by the IMF on July 3, after completing the second review of Pakistan’s PRGF-Supported Programme throws into spotlight this glaring oversight by the Fund. The following is the relevant part of the statement of the deputy managing director, and the acting chairman of the IMF, Eduardo Aninat: “ The Fund commends the authorities for consolidating gains in macroeconomic stability and progressing with structural reforms in a difficult economic and political environment. Inflation remains low and strong private capital inflows and remittances have allowed a build up of official reserves well above programme targets. The fiscal deficit for end-March 2002 was lower than programmed. Disappointingly, tax revenues collected by the Central Board of Revenue (CBR) as well as social spending were lower than targeted, although recent developments point to improved performance in these areas ( what recent development?).

The authorities’ economic programme for FY 2002/03 aims at tangible progress toward consolidating macroeconomic stability, reducing poverty, and strengthening governance in a wide range of areas. Barring a further deterioration of the regional security situation or other adverse shocks ( Here is where they should have mentioned the forthcoming elections), real GDP is projected to grow 4.5 per cent, supported by a notable pick up in exports. Cautious monetary and exchange rate policies and continued fiscal consolidation will help keep inflation low and allow for a further accumulation of international reserves. Implementation of the budget for FY 2002/03 will help reduce public debt while increasing funding for social services,especially health and education. This will, however, require strong determination in enforcing tax collection, the continued timely implementation of reforms to enhance tax administration, and improved tracking and effective monitoring of social expenditure and related outcomes. The authorities should also stand ready to undertake appropriate corrective fiscal measures, if needed, to achieve the budgetary targets.”

One assumes that this statement was made by the Fund’s acting Chairman after his staff had held close consultations with the official economic managers of Pakistan. Either the Pakistani officials completely forgot to mention the forthcoming elections in their consultations or the Fund staff was not all that attentive or intrusive enough to find out the hurdles in the way of smooth implementation of the budget for 2002/03. Perhaps as usual both were interested only in projecting a highly hopeful picture of the economy in the coming 12 months. Therefore, the perhaps decided to ignore the realities on ground. Both , indeed, have a stake in creating happy illusions.

The IMF staff has to prove, even if that proof it can conjure up by stressing on totally irrelevant statistics that if you kept a tight leash on your budgetary deficit you can revive the economy no matter in what level of depression and alleviate poverty as well. The Pakistani team of official economic managers which does not tire insisting that it is not taking any dictation from the IMF and in fact claims that it was the Fund which was being dictated by this all -knowing team of ‘internationally reputed financial wizards’ has bought hook, line and sinker the Fund’s recipe for disaster and for obvious reasons would like to join hands with the Fund in the game of conjuring up the desired illusion.The biggest failure of the Fund dictated reforms is the continuing stagnation in tax revenues and never ending drain of shrinking resources on keeping WAPDA and KESC afloat.

And the main reason for this is the failure of all the Fund prescribed formula for reforming the institutions of the CBR, Wapda and the KESC. As long as these institutions remain as inefficient as they are today and as corrupt as they have always been, Pakistan’s economy is not likely to get out of its doldrums. In such a situation, the economic dislocation caused by the 90-day electioneering , no matter how low it is kept, is expected to extract a heavy price in terms of further slow down in investment, production, exports, imports and a drastic reduction in employment. In the process the economy will shrink further while deepening the recession and making poverty more acute and more widespread.