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Saturday May 25, 2024

Austerity measures

We are facing multiple problems that include unemployment, industrial decline, high energy costs

By Mansoor Ahmad
April 14, 2024
In this picture taken on April 16, 2023, people throng a market area in Lahore. — AFP
In this picture taken on April 16, 2023, people throng a market area in Lahore. — AFP

LAHORE: Real leaders speak the truth and do not hide facts from the citizens. Our leaders are hopeful of good times ahead, but this time around, the citizens see no light at the end of the tunnel.

The truth must be clearly made known to the masses: that they must get ready for more difficult times in the short term.

The economy might start moving at a very slow pace if Pakistan accepts and implements the conditions the IMF wants us to impose, but the poverty would increase at a larger pace, and there would be no relief for the poor for the time being.

We are facing multiple problems that include unemployment, industrial decline, high energy costs, weak institutions, shaky law and order, and terrorist activities in KPK and Balochistan.

We are acutely short of funds and have not yet succeeded in documenting over 50 percent of our economy into a tax net. There might be a desire at some level, but the bureaucrats want the status quo.

The tax evaders also do not want to come under a proper tax regime.

Economic growth comes under a package where at least 51 percent of the above issues are addressed. There are decisions that must be taken to improve the economy. Our ruling elite has accepted the IMF's dictates reluctantly and not with an open heart. This is creating hurdles in implementation.

The rulers are tuned to take short-term decisions which benefit them in the next election. Correcting the flaws in our system requires measures that might not go well with the electorate as well as the vested interests that benefit from these flaws. Real reforms need selfless leaders who have no desire to cling to power but have the ambition to do long-term good for the country.

The reluctance to move ahead with IMF-dictated reforms is the reason that the improvement in the economy is slow. The ruling elite must forget about the next elections and impose reforms with full force, by annoying both the vested interests and the electorate. Even otherwise, they would be a loser, as improvements would be very slow by their standard.

It is not the case of pleasing a constituency by temporarily paving roads and sewerage with meagre funds.

These infrastructures usually last a year or two. This time around, we need decisions that ensure the quality of infrastructure that might take years to build.

We have to get rid of loss-making public sector enterprises on a fast track. Unfortunately, Pakistan is run by a coalition in which some partners are against privatization. This might result in compromise, and some PSEs might be spared from privatization, or the process unduly prolonged. Pakistan cannot afford a loss of even a single rupee.

Austerity is a big issue. Like charity, austerity also starts from home. What moral authority does a leader have if he appeals for austerity and himself lives a luxurious life? Committees on authority would not deliver. The top leadership must assess their lifestyle at government expense and voluntarily adopt a simple living.

If the committee formed by the Prime Minister asks for more measures, they could be added. It will, however, be seen that the committee would not recommend many measures that sincere leaders voluntarily adopted.