Money Matters

For what the bells toll?

Money Matters
By Zeeshan Haider
Mon, 01, 19

The Pakistan Tehreek-e-Insaf- (PTI) led government has been successful in clinching the biggest financial support in country’s history from the friendly countries to meet its balance of payment challenge.

The Pakistan Tehreek-e-Insaf- (PTI) led government has been successful in clinching the biggest financial support in country’s history from the friendly countries to meet its balance of payment challenge.

On the heels of $6 billion dollars worth of generous support from Saudi Arabia - $3 billion for balance of payment support and oil worth same amount on deferred payment – the government has secured a matching package from the United Arab Emirates (UAE) as well.

China is also reported to have committed another $2 billion for the same purpose.

These commitments have staved off the balance of payment crisis Pakistan was facing when the PTI took over reins of power in August.

But alarm bells have started ringing in the corridors of power that the jubilance over these generous supports could prove short-lived if the government failed to immediately take corrective measures to address long-running malaise in the economy.

The same warning was echoed by Farrukh Saleem, who was the officially appointed spokesman for the government on economic issues in October but was shown the door as soon as he publically expressed his concerns over government’s policies.

According to him, this complacency could sustain for an year and so and the country would be back to square one if government did not resort to homegrown remedy to the economic difficulties.

The government is coming under increasing criticism that it has completed four months in the office but has failed to set a direction for the economy. Ironically, the PTI is embracing the policies of the previous governments, which it had been holding responsible for the economic woes of the country.

The PTI has been scathingly criticising its predecessors over their ruthless domestic and external borrowings. But after coming into power, it is following in the footsteps of its forerunners without taking any steps to change the direction for the better.

According to the State Bank of Pakistan, it has lent 1.43 trillion rupees to the government to meet its expenditures over the past six months, five times higher than the amount lent to the government in the corresponding period in the last fiscal year. All this happened despite much-advertised austerity measures like cutting down expenditures of the PM House and restrictions on the official travelling of ministers and other officials.

The government had also promised to keep its bank borrowings low by jacking up the tax collections but the recent figures show that the FBR missed its half-yearly revenue target by a whopping Rs170 billion.

It is for this reason that the government is readying to present another a mini-budget or more amendments in the finance bill before the parliament to tighten the taxation measures further to meet its revenue shortages and reduce budget deficit.

The government announced lucrative financial package for the export industry and massively devalued the local currency in the hope of jacking up exports but exports have shown downward trend.

The PTI has been heavily dependent on overseas Pakistanis for sending their remittances back home in big numbers and making investment into the country but legal battles over the appointment of Prime Minister’s advisor for overseas Pakistanis and lukewarm response to the PM-CJ Dam Fund shows that it’s an uphill task to mobilise Pakistani diaspora in foreign countries. It is naïve on the part of the government to expect big foreign investment into the country without formulating policies to cut down the red tape and bureaucratic bottlenecks.

One wonders how foreign investors could be expected to bring in their capital into the country when petroleum minister every now and then threatens to review LNG deal made with a foreign country. Such deals should be subject to scrutiny for any anomalies but making these kinds of public claims for political point-scoring sends negative message to the foreign investors.

Moreover, the government needs to do requisite legislation to facilitate private investment before inviting investors to invest in the country. In view of razor-thin majority it enjoys in the parliament, the government needs good working relations with the opposition to pass legislation through the parliament.

But this objective could not be achieved if government and opposition remained at loggerheads. The government better bring the political temperature down at least inside the parliament to seek opposition’s support in legislative business. It is unfortunate that apart from the finance bill the government could not push a single piece of legislation through parliament after the passage of five months. Prime Minister’s decision to cede chairmanship of the Public Accounts Committee is a commendable step and it needs to be followed by more goodwill gestures to placate opposition.

The government has come into power with a populist agenda but it runs the risk of losing popular support if it fails to deliver on its promises.

The Fitch Solutions – the research arm of the global credit rating agency – has very correctly pointed out that the PTI government needs to deliver tangible economic development if it wants to continue with its popular support.

With economic hardships increasing for the common man in the shape of high inflation and new taxes, it could become difficult for the PTI to keep up its popular appeal.

Ideally, the governments should take difficult and painful decisions in its initial months in office because as time goes by it becomes difficult for it to take hard decisions.

The government has to draw up a comprehensive strategy to deal with the economic challenges faced by the country and then take concerted steps to implement it.

The challenges faced by Pakistan cannot be addressed by a single political party, even the one in power, or even an institution.

The country has seen political as well as military governments and the challenges it has faced have remained as such because of the unending acrimonious attitude.

The political leadership as well as all other stakeholders should at least cooperate with each other to address these problems and they need not to use these issues for their narrow objectives.

If political bickering continued, then there is no chance of country’s economic woes to die down anytime soon. Time has come that the national leadership rise to the occasion failing which the country’s challenges would become more intense and grave.

The writer is a senior journalist based in Islamabad