Deteriorating finances

Amid a depreciating rupee, soaring inflation, and declining stock exchange, the talks between the FBR and traders remain inconclusive on the implementation of a presidential ordinance giving wide-ranging powers to tax officials to disconnect utility connections of non-filers. Though the All Pakistan Anjuman-e-Tajran (APAT) has ended its protest in front of the FBR headquarters, they have announced their plans to hold a sit-in at Faizabad in the third week of October. The federal capital has witnessed hundreds of traders rallying against the promulgation of the presidential ordinance and calling upon the government to scrap new tax laws. The current government’s penchant for legislation through ordinances rather than through proper parliamentary procedure has become a routine in the past three years. Even if a law is good, it loses its authority in ethical and moral terms if it is imposed without due consultations with all stakeholders. Then there is the question of the dire financial situation Pakistan is heading into.

The country’s financial resources are declining fast both in fiscal and monetary terms. There are widely visible imbalances that are sapping the remaining energy of fiscal and foreign exchange resources. The government has had four finance ministers in three years and each one has talked about the difficult situation we are in. It is true that there is a price surge in commodities in global markets, but the government should have prepared itself for this impending crisis by managing its import bill. The same applies to prices of raw materials and fuels. From coal and edible items to LNG and metals, all prices are surging to unprecedented levels. For the average citizen, the petroleum hike has a tremendous impact as it directly affects transportation costs of groceries. Prices of palm oil, sugar, and wheat are affected the worst. The industry itself appears to be under undue strain due to inappropriate government policies. Repeated ‘adjustments’ in the price of electricity are also draining the meagre resources that the common citizenry in Pakistan has.

The government must realise that it is standing on highly fragile grounds. It has been announcing more and more incentives for the rich with some cosmetic schemes for the lowest income strata such as opening of free-food centres and shelter homes for the poor. Further, an ill-conceived foreign policy will adversely affect our economy even more. We are still dependent on the IMF programme for our economy to keep breathing. Our dependence on creditors must serve as an eye-opener as our economic viability itself is at stake now. With this backdrop, the upcoming talks with the IMF are of crucial importance and must be taken seriously. The last quarter of this calendar year appears to be economically foreboding.