Civil disobedience: Too much at stake

Published August 25, 2014
Imran Khan (C) addresses supporters during protest rally against  government in Islamabad on August 16, 2014. — Photo AFP
Imran Khan (C) addresses supporters during protest rally against government in Islamabad on August 16, 2014. — Photo AFP

THE national economy had just started breathing. The confidence of democrats, investors, foreign lenders and international credit rating agencies was slowly building up as internal and external pressures prompted the government to take tough economic decisions, though reluctantly and with slow implementation.

That nascent breathing space is being squeezed and the confidence of investors virtually seems shaken as the government retreats into a self-protection mode, with the two lateral entrants into politics demanding the prime minister’s resignation.

No doubt, there are some signs of macroeconomic stability, a pickup in growth and investment, a slowing down of inflation and a stable exchange rate, but their vulnerability to political adventurism stands exposed.


The demand for civil disobedience came at a time when the government had, under pressure, started withdrawing tax exemptions to the most powerful


Friendly bilateral development partners like Japan were waiting for the government and the IMF to complete the fourth review to revive credit lines to Pakistan, which were suspended a few years ago. Japanese agencies were expected to invest in projects like drinking water facilities and transport infrastructure, particularly for Karachi.

Independent economists and the IMF were getting tough in their comments against the government for being slow on the reform process, affecting the country’s long-term economic prospects. The process has been further slowed down by the mobocracy in Islamabad.

As a pressure group, the PTI and the PAT should have pressured the government to do more to improve the living conditions of the large population still living below the poverty line and in sub-human conditions, instead of making the much-needed tough reforms for corrections more difficult.

How can an elected government afford to rationalise energy tariffs or introduce reforms when a tsunami is hitting its seat of power and parliament? And why would a beleaguered prime minister, after taking away over Rs110bn from the pockets of businessmen — his most effective political constituency — like to move on to the next phase of withdrawing the remaining Rs400bn worth of tax exemptions promised to the IMF?

Had the PTI of Imran Khan thought it was a government-in-waiting, it should have pressurized the current government to make all the corrections in the economy and the electoral process so that it could get a clean slate by the time it entered parliament through a democratic process.

Instead, it has chosen to first appeal to the IMF and its major stakeholders not to support the government, and then threatened to not return the loans the fund is extending to Pakistan. As if that was not enough, the cricketer-turned-politician moved on to announce a civil disobedience movement, ordering his followers to stop paying taxes and utility bills — a major problem that is restricting the growth trajectory.

The demand came at a time when the government had, under pressure, started withdrawing tax exemptions to the most powerful sections of society, showed some signs of recovering electricity bills from non-paying consumers, and was going against energy theft. For the first time in the last 15 months, the bureaucracy had been able to reduce recoverable electricity arrears from around Rs300bn to Rs244bn at the end of July, while the tax machinery was closing in on more than 700,000 potential tax evaders.

While the government has estimated immediate direct losses to the economy at Rs500bn (as reported by the minister for planning and development Ahsan Iqbal) on account of the stock market loss and other businesses problems, policymaking and delays in big development projects seem to be direct victims of a revival of destructive politics, irrespective of the merits of the PTI’s demands.

The loss in revenue and the dent to energy sector recovery would impact the fiscal deficit and structural reforms — the centrepiece of international assistance, if not other deep rooted domestic problems.

The government has already extended the bidding for 6600MW coal-based power projects, earlier scheduled for August 18, due to a virtual siege of Islamabad. The multi-billion-rupee metro bus project for the twin cities of Rawalpindi and Islamabad has slowed down. But these are just a few examples.

The visits of presidents of Sri Lanka and Maldives, scheduled this month, have been postponed indefinitely, while many business delegations have cancelled their visit to Islamabad. The government may have to postpone a high profile visit of the Chinese leadership in September as the political imbroglio in Islamabad continues.

It should not be forgotten easily that it takes a lot of time, effort and hard work to build confidence and growth momentum in a weak economy. These begin to evaporate as initial signs of uncertainty appear. The auction of $1.1bn telecom licences, the launch of the $2bn Eurobond, sale of almost $1bn worth of shares in government entities was to be followed by the issuance of Sukuk bonds; this momentum may not be sustained.

It is, therefore, in the interest of everyone that the political tension should end at the earliest. The people on the streets ought to return to their homes to help shore up businesses, educational activities and production of good and services; the earlier the better.

Published in Dawn, Economic & Business, August 25th, 2014

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