Easy money

LAHORE: We lack the vision to improve the economy. We may be dependent on foreign assistance, but most of our fiscal problems require domestic restructuring, which we are not prepared to do.

We need foreign inflows to service our foreign debt. That is definitely a big problem, but another problem is the huge gap between revenue generation and our recurring expenses. Our leaders plead for foreign assistance but make little effort to increase revenues and decrease expenses. Revenues cannot be increased without fully documenting the economy, something the government does not intend to do. Expenditures have to be cut drastically at the upper level, a step the ruling elite cannot take because it would impact the princely lifestyle they enjoy at the expense of the national exchequer.

There are numerous avenues through which expenses could be curtailed. The first is by eliminating corruption and incompetence in the power generation and distribution system. It seems that the rulers have now started thinking that inefficiencies in the sector cannot be improved. Had these malpractices been eliminated over the past 10 years, there would be no circular debt. Line losses, theft, and corruption amounted to 20 percent when our generation capacity was 12,000 MW, which meant we lost 2,400 MW to thefts and other inefficiencies. Now, the generation capacity has doubled, and the losses have increased to 4,400 MW. This also means that the corrupt (theft is not possible without the connivance of the distribution staff) are minting money with every increase in the power tariff.

The rulers are tolerating all this with occasional threats of jailing power thieves. By eliminating corruption in both the power and gas sectors, we could save over Rs1.2 billion that goes down the drain in the shape of circular debt. The government also pays hefty interest to the independent power producers as it fails to clear their dues in time.

Every government functionary says that the government has no business being in business. Yet, the government feeds numerous public sector companies for at least the last two decades but is not privatizing them. PIA, Pakistan Steel Mills, Railways, and numerous other entities are incurring hundreds of billions of losses, but the government lacks the courage to privatize them. Every economist says that even if all loss-making entities are privatized for free, it will save the state a huge amount that it bears yearly on losses.

Then there are avenues of corruption in bureaucracy. The former FBR chairman Shabbar Zaidi said recently in an interview that there are 23,000 employees in the organization. He said with the advancement of technology, we do not need more than 5,000 persons. He proposed that 18,000 employees should either be removed or asked to stay at home and never visit the organization while they get salaries until retirement.

He claims that it will make the department highly efficient and a major chunk of corruption would be addressed. He said the unnecessary staff comes to the office to take bribes only and use office resources (phones, vehicles, power, etc.). Zaidi claimed that the proposal was shelved because of vested interests, and he received threats for putting forward this proposal.