A SHORTFALL in the revenue target thus far in the fiscal year means a raft of new taxes is about to be introduced in order to ensure that the government will keep its fiscal deficit target for the year. This was decided during the ninth review of the ongoing IMF programme, and the Fund’s mission chief went on to add that these new revenue measures will be classed as “prior actions” to be implemented before the next review. This leaves the government with very little wiggle room, meaning the new taxes will have to be announced soon, and will therefore fall almost entirely on those already within the tax net. Industry representatives now wait with anxiety to discover who will be asked to bear the additional burden. The review overall has been successful, and as expected, the Fund will release the next tranche from the loan programme by December, following approval of the executive board.

The Fund has been shown a revenue generation plan that the government intends to implement to ensure that the shortfall of Rs40bn in the collections target since July will be met by the time of the tenth review. Against this plan, Fund staff has approved the release of the next tranche for Pakistan. Now it is incumbent on the government to reveal what this plan is in all its detail. It is disappointing to witness this sort of ad hocism in the management of government accounts at this stage — by now, it ought to have been a part of our distant past. It hearkens back to the days of minibudgets in the 1990s.

For its part, the Fund owes us a clear and unapologetic explanation of where things have failed in the revenue effort of the government. In addition, since the talks in the ninth review were also part of an Article IV consultation, an annual exercise undertaken to draw up a detailed assessment of where things stand in the economy, a comprehensive explanation ought to be given for the repeated delays in the implementation of a few important structural reform measures, particularly those that are related to the power sector and privatisation. In the past, the Fund has been criticised for soft pedalling its pressure on the government to act on reforms that are vital to reinforcing the underlying sustainability. Whether or not the staff feels this criticism is warranted, they should be more mindful that their professional obligations to the citizenry of Pakistan, the ultimate stakeholders in the enterprise, trump all other considerations. And the citizenry has a right to know how this borrowed money is being utilised, and how much real progress is being made to ensure that the need to live on borrowed money is being reduced. We need a realistic appraisal of how the Fund’s resources, and the window of opportunity they have created, are being put to use.

Published in Dawn, November 8th, 2015

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