Missing direction

Published September 18, 2022

IT is unfortunate that Finance Minister Miftah Ismail seems to have largely withdrawn from the public eye at a time when someone with grit and determination is needed to proactively manage the economy.

One hopes that he hasn’t been forced into the shadows by detractors from within the PML-N. There were some who had loudly protested the difficult yet necessary decisions Mr Ismail had to make to plug fiscal leakages Pakistan cannot afford at this juncture. It is clear he has not yet been forgiven for those decisions.

Last Tuesday, PML-N’s vice president Maryam Nawaz, responding to questions about the state of the economy, had made it clear she remained “categorically” opposed to the fuel and electricity price increases Mr Ismail was forced to implement. “I don’t support this decision, and it should be corrected,” she had said, adding that her “first responsibility was to the people”.

Read: Miftah on the defensive after PML-N supremo ‘strongly opposes’ petrol price hike

For Pakistani politicians across the ideological spectrum, ‘responsibility to the people’ is often just a euphemism to splurge scarce state resources on vote-winning subsidies. Mr Ismail, on the other hand, has inherited an economy that gives him no room to sign off on such plans. His compulsions must not be made the reason to sideline him. Instead, what he may be able to offer, as he proved in his approach to reviving the IMF programme, is hard-nosed management of the economy.

Also read: Govt has 13 months but I may not have that much time: Miftah

Pakistan has been dealt a body blow by nationwide floods and the devastation they have caused. The impact on the economy will be felt for months. Meanwhile, the current account position continues to deteriorate due to the need to import fuel and cover food shortages, while exporters find it difficult to fill orders due to a global slowdown, sharply higher production costs and shortages of inputs. The resumption of the dollar’s relentless climb, expected to continue in the near future, also makes matters worse. A finance minister freed from the trappings of election-year considerations — especially someone who can put practicality above self-interest — may be just what the country needs to chart its way out of the troubled waters it is in.

The going won’t be easy. Weekly inflation has persisted above 40pc for the past several weeks, burning a massive hole in the citizenry’s household budgets. However, with tighter management of markets and robust price control mechanisms to set fair prices, part of the inflationary pressure can be lifted. To ensure the success of such efforts, it will be important for the finance minister to forcefully resist internal demands for ‘relief’ for special interest groups.

A grave mistake was made in withdrawing the electricity bill taxes from traders under political pressure. Such mistakes will have to be reversed. The economy cannot be resuscitated if rival factions within the PML-N continue to make it impossible to take important decisions and stick to them.

Published in Dawn, September 18th, 2022

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