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Friday December 09, 2022

Half a bailout?

September 07, 2022

The fast emerging crisis surrounding Pakistan’s economy has quickly overwhelmed the short-lived joy over the IMF’s revival of a stalled loan programme. The news from the Washington-based lender that prompted many in the ruling structure to pat themselves on their backs quickly paled by comparison to the fallout from the destruction following floods all over Pakistan.

With prices of essential commodities skyrocketing and the prospect of near-famine conditions haunting the poorest of the poor, returning from the brink of default has quickly become Pakistan’s side story. In brief, the IMF rescue package stands as no more than half a bailout or even less so.

Going forward, Pakistan urgently faces the need to be salvaged on two related fronts. In the short term, there is no alternative to a raft of crisis-related measures, each becoming the very pivot for saving lives at risk of extreme malnutrition and possible deaths. But for the long haul, Pakistan needs to undergo a fundamental reorientation on the very way that the country is ruled.

For the immediate future, the focus on saving lives and a return to a semblance of normality requires unpalatable steps that will only bring a considerable political cost for the ruling structure. Measures that immediately do away with any existing or prospective concessions for Pakistan’s well-endowed communities must be undertaken urgently. The shameful revelation of a $300,000 worth luxury car stolen from the UK and found in Karachi just this weekend, spoke volumes over a part of the governing structure squarely in the hands of the well connected. Clearly, this event must shed light yet again on how the collusion between authorities in Sindh and possibly Islamabad facilitated legitimization in Pakistan of yet another theft committed offshore.

Meanwhile, Prime Minister Shehbaz Sharif’s oversight of choices such as the promise to set up a 10,000MW solar power plant conceivably in the public sector is nothing short of completely mind boggling. Pakistan is already saddled with a colossal public sector that remains fundamentally inefficient and tainted for corruption. To saddle that very same public sector with more of the same smacks of a failure to come to terms with a dismal reality across the country.

As for former prime minister Imran Khan’s relentless attacks on the government, a reality check is essential to review Khan’s own track record as prime minister. Just last December, Pakistan was slapped with one of the worst shortages of urea at the peak of the first irrigation of the wheat plantations across the country during Khan’s rule. That failure contributed heavily to the eventual shortfall of wheat across the country. Though Khan’s political graph appears to be rising now, his government’s track record of economic governance left many gaps that deserve to be revisited for a comprehensive review of Pakistan’s economic history.

Going forward, Pakistan’s ruling class across the board must come together to force a three-fold change:

First, the role of government in running the economy needs to be redefined. The country can ill afford running affairs that should not be its business. State-owned entities such as Pakistan International Airlines or Pakistan Steel Mills must immediately be privatized irrespective of the financial returns, to ensure that the state must not remain responsible for keeping them afloat year after year. The Pakistani state must only remain responsible for revenue collection, maintenance of law and order, ensuring security, oversight of some elements of the social sector notably education and healthcare, managing municipal administration and ensuring national unity through a collective acceptance of the constitution. The Pakistani state must not be in the business of running any business. History has proven beyond doubt that governments are simply too incapable of running businesses profitably.

Second, as the country tightly enforces rule of law, its focus must fall squarely on compliance with Pakistan’s tax-related rules. For decades, widespread tax evasion has caused incalculable harm to the Pakistani state and its people. In the past during periods of Islamabad’s close ties with US-led Western military alliances, generous amounts of foreign assistance repeatedly filled the gap. But today, the tables have turned as Pakistan’s economic crisis can not be overcome with large foreign assistance. The moment has come to clamp down exceptionally hard on tax evaders, irrespective of their clout within or outside the country.

Finally, history has amply demonstrated that nations are formed and saved by the people. That being the case, a large-scale mobilization of the public to reform Pakistan must range from a facilitation of individuals to private entities such as non-profit organizations to join the relief and rehabilitation causes. The fallout from the floods on top of Pakistan’s ongoing economic crises will not go away soon. Rescuing Pakistan must be a long-term commitment.

The writer is an Islamabad-based journalist who writes on political and economic affairs. He can be reached at: farhanbokhari@gmail.com

Comments

    Sh.Jamil commented 3 months ago

    Spot on!

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