Saturday December 09, 2023

A hard rain’s a-gonna fall

January 26, 2023

Political instability has hit a crescendo. Imran Khan has successfully ended his party governments in both Khyber Pakhtunkhwa and Punjab and the remaining resignations of the PTI MNAs have been accepted as demanded long ago.

The PTI had been demanding since April 10 last year that the en-bloc resignations they tendered that day, accepted by the outgoing deputy speaker Qasim Suri, be actualized. It is a separate matter that when 11 resignations were accepted by current Speaker Raja Pervaiz Ashraf, the PTI cried foul and demanded even in the courts that the remaining resignations too should be accepted.

With the dissolution of the provincial assemblies of the Khyber Pakhtunkhwa and Punjab and the installation of the new caretaker chief ministers, Imran Khan has finally realized that leaving parliament in haste has caused his party irreparable damage, something his party stalwarts warned him to no avail. For the last week or so, he has been trying to recapture the position of the Leader of the Opposition in the National Assembly as well as the chairman of the Public Accounts Committee but now it is too little and too late. Imran is now a day late and a dollar short.

However, the bigger question is not just about the political instability but the looming economic meltdown – no matter how intertwined and organically linked they are.

Consider: Pakistan was fast approaching an economic default when Imran Khan jumped ship after suspending the IMF programme and not only freezing but lowering the power tariff and locking the petroleum prices as the global prices went up. Not just that but as the Shehbaz government took over and new Finance Minister Miftah Ismail resumed negotiations with the Fund, Imran used every trick of the trade to sabotage the resumption of the programme – using Shaukat Tarin and pressurizing the finance ministers of Punjab and the Khyber Pakhtunkhwa to disown the programme. The sole aim of the sabotage was the last-ditch effort of the dethroned Khan to create anarchy to pressurize the security establishment and the judiciary to bring him back to power so that he could resume his one-party state building project.

The new government was able to kickstart the stalled IMF programme, leading to a rise in the prices of essential items and utilities. Some of the new taxes also affected the trading class that has remained out of the tax net for ages. This was resisted by the class that traditionally makes the vote bank of the PML-N. It had to be reversed while the tussle within the party over the finance portfolio was jacked up, ending in the overthrow of rookie Miftah Ismail and the arrival of veteran Ishaq Dar by the end of September last year.

Sadly, the Fund programme has been in a limbo since then as politician Dar has tried to avoid the political cost of the economic fallout of the resumed Fund programme. The bid to fill the forex kitty from ‘friendly countries’ to ease out the hard programme of the IMF has not worked in the last four months or so. Instead, countries and multilateral agencies/donors have clearly said they won’t help until we go back into the IMF programme.

Our political leaders still have not come out of the cold war hangover of the rentier state. Our power elites have benefitted from the cold war and the war economy – which is over after the final pullout from Afghanistan. We can’t fill our dollar reserves with the old cold-war paradigm any more. The delay in the resumption of the IMF programme has caused enormous damage to the economy, the businesses and the people of Pakistan. The mountains of piled up cargo at the ports, the rainbow variety of the exchange rates, the shortages of essential items including lifesaving drugs and equipment, the layoffs at the factories tell the tale of a looming ‘Hard Rain’s a-Gonna Fall’.

Looks like the government has finally seen the writing on the wall and we might see the resumption of the Fund programme that might be even harder than we had imagined in October but the indecision still lingers. Indeed, there is no alternative to the resumption of the programme now but the main question is: where do we go from here? The economy will be stabilized but the poor will get poorer and the number of the unemployed will grow while the middle class will shrink after taking a huge hit under Imran Khan. The government might talk about the targeted subsidies but that won’t make much difference.

The situation calls for massive economic reforms aimed at planned and phased retiring of the $130 billion foreign loans, privatizing sick state owned enterprises, ending fat corporate subsidies and subsidized utilities to big business and state organizations, reducing indirect taxes and slapping more direct taxes, providing equal opportunities and a level playing field to all businesses without exception. What is also needed is to bring in rational agricultural income tax and end the current insane agricultural taxes collected by provinces, and also end the black hole of the unproductive real estate, bring in transparency in every kind of budget, reduce the size of the ministries and end the duplication of around 15 federal ministries and divisions devolved to provinces that were created under fancy new names.

The coalition government must roll out this reform plan and leave it for the next government to complete. Leaving it to the caretaker government will be a recipe for disaster and its costs to the incumbent and the country will be colossal.

Without changing budgetary priorities, focusing more on the people and their health, education and human potential, without modernizing agriculture and focusing on the products in which we are globally competitive, without engaging in meaningful economic ties with neighbours, placing unresolved conflicts on the backburner, the existential crises will worsen. Further indecision will bring Armageddon. Act now!

The writer is a journalist. He tweets @murtazasolangi and can be reached at: murtazasolangi@