Rare opportunity

LAHORE: Caretaker setups in Pakistan have failed to deliver, as the outgoing governments in the last year of their tenure refrain from taking difficult decisions before going for elections. This leaves the caretakers to do the dirty work.

The decisions like increase in power rates and petroleum prices were left with the caretaker setup. If the caretakers takes the unpopular decisions that economically are essential, the electorate is deeply hurt.

These much needed necessary corrections in utility and petroleum rates are not made for almost a year by the outgoing government. In such situations, if the caretakers stay put, the economy deteriorates further forcing the government that assumes power after elections to take even more difficult decisions.

The elected then consume the first three years of the government in fire fighting. They finally control the matters in the fourth year. But they destroy the hard work of the previous four years by announcing public appeasing measures and refraining from taking any economic decision that would not be liked by the electorate. This vicious cycle is repeated every five years.

This time around, most of the difficult economic decisions were taken by the PDM government in their fifteen months. Last 15 months have been the most painful years for the citizens of Pakistan.

Petrol prices have almost doubled in last fifteen years. Power rates have touched the roof. Minimum charges for natural gas have been enhanced to Rs800 (from Rs250-300) per month.

This will probably be the first caretaker setup that will not face the pressure that all previous caretaker governments felt. Under the International Monetary Fund (IMF) agreement, the outgoing government has provided the timeline for further actions of power, petroleum rates, taxation and privatisation.

It is possible that inflation would be lower during the caretaker tenure. The economy would also improve and the next elected government would inherit a stable economy.

If it did not tinker with economic policies Pakistan would embark on a sustainable growth path. The caretaker government during its limited tenure must strive hard to improve governance, and transparency in the private sector.

It should not withhold the budgeted funds for the ongoing development schemes. It should not start any new development project and leave it for the elected government.

Pakistan’s economy was under immense pressure due to the above factors. The political governments have lost some grip on the economy. Caretakers must take strict actions against hoarding, delay in sugarcane crushing season (that would fall during their tenure) and a visible decline in government services.

The privatisation process must be started now as it takes over six months to finally approve a new buyer. The elected government could then complete the remaining procedures. Austerity must be demonstrated in the period of caretaker setup that should be a guide for the new elected government.

The caretaker government must not succumb to the pressures of vested interest. Hands of caretakers have already been tied by the current agreement with IMF under which most subsidies have been withdrawn. Exports would pick up without any subsidy when exporters improve their efficiencies.

Food inflation is still very high. Political governments failed to eliminate middlemen from agriculture trade. The rates of agricultural products cannot be controlled unless the role of middleman is eliminated. The caretakers should take concrete measures to eliminate this menace.