AFTER the IMF and the World Bank, caretaker Finance Minister Dr Shamshad Akhtar has also raised the alarm over the state of the economy, as she told a Senate committee this week that a comprehensive reform plan was being finalised and would soon be presented to the caretaker prime minister.
Since she counted the huge subsidies to the elite (which have failed to boost exports, for example) and the absence of taxes on real estate and retailers among the major reasons of the resource generation shortfall year after year, one can be optimistic that her economic reform plan will address these areas.
When Dr Akhtar is able to present her plan to the prime minister must depend on his availability, as he is on the final leg of his 10-day foreign tour. As these lines were being written, the Gulfstream 450 with Pakistan’s official markings had landed in Saudi Arabia, and the prime minister and his entourage were seen leaving the aircraft to perform Umrah and pray and pay respects in Madina.
Hopefully, the prime minister’s 10-day foreign trip will end soon and he will return to his seat of power not only to focus on his primary task of holding free, fair, and impartial elections but also to embark on reforms the last parliament-empowered the caretakers to roll out.
Those with household incomes under Rs50,000 a month cannot be expected to pay electricity bills of Rs30,000.
It seems a great shame that the IMF boss had to remind Pakistan that it needs to tax the haves and offer relief to the have-nots. Not dissimilar remarks about the unsustainability of the current practices have been made by a senior World Bank official.
I say shame because these are institutions not known to fight on behalf of the poor and have usually kept their focus on firmly pushing the ‘free market’ and even the neoliberal economic agenda. For them to say the things they are saying is an indication of how bad, in their view, the situation can get in our nuclear-armed country of nearly a quarter billion people.
There is nothing new about the elite capture of the economy. It started more or less within the first decade of Pakistan’s coming into existence, and has become progressively worse. The whole philosophy of making the size of the cake so big that everybody got a slice was a ruse to reinforce elite capture.
These attitudes are firmly entrenched and change will neither be easy nor resistance-free. An economic reform plan that taxes the civil and military elite and their tax-free holdings in real estate, or cuts their freebies called subsidies, could take the tax-to-GDP ratio to 15 per cent, and represent an addition of over Rs2 trillion to the national exchequer.
Ergo, it is highly desirable and will be great for the country, but it will also anger a very influential section of society that shows no sign of understanding that the status quo is not sustainable even in the short term. This segment will need to be convinced that reforms will dictate the future of our country and, with it, their own status.
A handful that call the shots in the country remain unaware of the ground reality and how their callous disregard towards the agony of the shirtless multitudes may create a powder keg-like situation as the public’s hardship and anger continue to mount.
If the prime minister can indeed quickly endorse all the economic reforms the outgoing parliament empowered him and his cabinet to implement, they shall have done more for the poor and for the long-term viability of our country than most who have made tall promises and delivered very little.
The clock is ticking and the day of economic reckoning is fast approaching. This warning is for those who will not see reality. Those who can will tell you that it has been upon us for a considerable period of time. The subsidies, the tax havens, such as real estate and even agricultural income, are unsustainable.
Those with household incomes under Rs50,000 a month cannot be expected to pay electricity bills of Rs30,000, especially with food inflation running in high double digits too. In recent weeks, global energy prices have risen sharply. Our poor and vulnerable need to be protected against their knock-on effects, which threaten to decimate their budgets.
BISP targeted subsidies are doing this to an extent. A lot more money needs to be pumped into them and their scope expanded. Anyone who is opposed to this should understand the consequences of inaction in helping the poor.
Reporters who do grassroots reporting across the country and talk to those on the streets every day, as against those content with reporting on political intrigues in the capital, paint a scary scenario, with inflation driving a sizeable chunk of the population to utter desperation.
The caretaker government and the one that follows, regardless of the sort of electoral exercise that puts it in office, will need to bite the bullet and do what is needed for the country and its economy to remain viable. Political reconciliation has to follow.
To take root, any reform plan will need the kind of political stability — which seems out of the question in the current atmosphere of polarisation and divisions in society and country. But, even if it seems like a tall order, given the intransigence of some of the protagonists, this is something that has to be done.
As Sunday’s Mastung and Hangu attacks demonstrated yet again, economic challenges on the one hand and security issues on the other pose an existential threat to our beloved, blighted land. They are both the result of blindly following suicidal policies.
At least a reconciliation process should be initiated that leads to a consensus on the need for economic reforms and a security policy that helps us steer out of this deep, deep crisis. It isn’t rocket science to determine that this is vital.
The writer is a former editor of Dawn.
Published in Dawn, October 1st, 2023