Fire-fighting three years down the line!

Three years down the line and the PPP led government remains engaged in fire fighting as far as the economy and indeed politics is concerned. The obvious question is whether the blame resides with the opposition, the government's coalition partners or on its own policies/inefficiencies/corruption.
The opposition and disgruntled coalition partners accuse the government in the centre of creating one crisis after another - be it with respect to the judiciary, the economy or politics, national or regional.
The PPP, in its own defence, variously blames opposition parties, coalition partners, the establishment, the judiciary and the flawed policies of former army strongman Musharraf as the reasons for its failure to deliver on multiple fronts. But, the ruling party maintains with a great degree of veracity, it has delivered on two very critical fronts: the passage of the eighteenth amendment and the National Finance Commission award. These successes, the party stalwarts argue, are attributable to its politics of consensus manifest in PPP's focus on sustaining a coalition with all regional political parties in all provinces, with the exception of Punjab in recent weeks. PML (N), the only party with aspirations to rule in the centre, ousted the PPP from the Punjab government after nearly three years of being accused of playing the role of a 'friendly opposition' defined as restricting criticism of multibillion dollar scams and flawed economic policies to periodic fiery speeches by the Leader of the Opposition with little or no follow up. The President's address to the joint sitting of parliament on 22 March was a continuation of this policy as the opposition did not disrupt the speech and only boycotted it. In retaliation the PPP accuses the PML (N) of periodic political point scoring, a claim strengthened by what the PPP claims is maintaining power in Punjab through support of lotaism in recent weeks.
Be that as it may the politics of consensus, as constantly reiterated by the PPP as its primary motivating factor has, to date, been focused on sustaining the PPP in power in the Centre. The MQM, a recalcitrant coalition partner, for example has not supported the PPP on two major issues - the passage of the National Reconciliation Ordinance (NRO) in parliament, critical for the PPP leadership, and on economic issues ranging from upgrading the domestic price of oil in line with its price in the international market, and implementing the Reformed General Sales Tax that would have allowed the government to meet the performance criteria as stipulated in the International Monetary Fund's (IMF) Stand-By Arrangement (SBA) and thereby released the desperately needed 1.7 billion dollar penultimate tranche. JUI (F) has already left the coalition. That pretty much leaves the ANP that has been steadfast in its support of the PPP on a wide range of issues including its being sidelined periodically due to the politics of Sindh. Critics of the ANP maintain that accountability with respect to the source and amount of wealth of the party leaders before and after 2008 may provide some answers. Be that as it may the PPP also angered ANP on Friday as Farooq Naek did not allow some ANP senators to speak.
The PML (N) opposed the NRO whose benefits are PPP specific including those bureaucrats who supported/benefited from the PPP's years in power yet the PML (N) also opposed the escalation in oil prices and the RGST. As a party that provides an alternate leadership at the centre, economists are agreed that the PML (N) would have had to follow many if not all of the economic prescriptions currently on the PPP's agenda that are not being implemented due to resistance in parliament, though the promulgation of the three Presidential ordinances tabled in the national assembly but not for passage reflects the obvious: parliament can and will be circumvented depending on the amount of pressure on the PPP leadership.
However PML (N) stalwarts maintain that they would have focused on reducing corruption in the Federal Board of Revenue (currently estimated in excess of 500 billion rupees or 5.8 billion dollars, well in excess of the IMF tranche) as a means to raise tax collections; and ended bail out packages to state owned entities by appointing people on merit thereby releasing another 300 billion rupees for other expenditure - revenue that would be used to reduce or eliminate taxes on oil and products as well as inject into annual development outlay.
What is perhaps critical to charges and counter charges is that corruption has long been acknowledged as endemic within our political/civil and military bureaucratic structure and the point being made by the opposition and the coalition partners is not that it has surfaced with the advent of the PPP government but merely that it has increased during the current dispensation. To prove the veracity of their contention they point to the multi billion dollar scandals associated with executive appointments not based on qualifications or relevant experience that have surfaced during the last three years. Pakistan Steel, Pakistan International Airlines, National Insurance Corporation, Hajj scandal to name a few have cost the exchequer in excess of 300 billion rupees this year alone - money that should have been diverted to the most vulnerable be they the flood affectees or be they the very poor. The PPP argues that the increase in the number of scams reflects not an increase in corruption but greater vigilance of the media. However corruption has not been the focus of the government for the past three years given that an accountability bill is still pending with the Law Minister having attended no more than one or two relevant committee meetings.
In this rather difficult economic and political environment the question is what is the economic vision of Dr Hafeez Sheikh and Deputy Chairman Planning Commission, Nadeemul Haq, a retired IMF staff member appointed by Dr Sheikh, and what is their capacity to deliver?
Both these gentlemen have good academic backgrounds and extensive experience working for multilateral development institutions. This, one can safely assume, must account for the two being enamoured of the standard normal conditions of the International Financial Institutions (IFIs). An example is their support for the free market in setting price of some consumer items. Such a policy, one would humbly submit to the two, does not take account of four prevalent factors in our country: (i) cartels in sectors that operate within free market conditions in other countries like sugar, cement etc as well as cartels of importers engaged in profiteering; (ii) state operated importer of essential commodities, Trading Corporation of Pakistan, is accused of violating public procurement rules; (iii) rampant smuggling across the Indian and Afghan border that takes advantage of shortages in neighbouring countries; and (iv) complicity of law enforcement agencies, those that come under Rehman Malik and charged with monitoring the border as well as those that come under the provinces.
But what is disturbing about these two gentlemen is their failure on multiple fronts. Taxes are being levied without careful thought and expenditure slashed on development rather than on current expenditure. In this country there is a gas shortage with two fertiliser plants not receiving any gas and yet the Minister of Finance deemed it appropriate to impose a sales tax on farm inputs including fertilisers in the presidential ordinance. Import of LNG is not taking place because the government is unable to resolve the inter-circular debt. Sales tax is levied on sugar, an item of daily use, hurting the vulnerable more than the rich. General sales tax and petroleum levy is paid on oil and products which accounts for higher costs of production across the board as well as high costs of transport.
The government dishonestly refers to a reduction in tax collections on oil and products as a subsidy which clearly is not the case. The list is endless. One can only hope that a vision accompanied by a focused action plan would be developed and implemented by the economic managers. And while they are both unable to convince anyone in the country that their policy would lead to better times in the future yet they should at least stop fire fighting, which does not require too much of thinking as it has been laid out by the IFIs, and instead focus on formulating a comprehensive vision in which tax policies on all sectors must be in synch with the drive to develop the industrial/farm sector with an element of equity thrown in.
The Planning Commission is charged with the responsibility of providing a vision/policy and the Ministry of Finance to ensure that the policy is implemented in terms of annual allocations. One needs politically as well as temperamentally strong individuals for these two offices who are neither enamoured of the outer trappings of the office they hold or indeed with the prestige that goes with the office. That both gentlemen do not need money from their current job given their reportedly rather large bank accounts and pensions from IFIs on which they do not pay tax to Pakistan. Their supporters would no doubt argue that given the penchant for many politicians to further amass wealth even though they may possess enough to sustain the luxurious life style for four to five generations is valid.
But for the common man it is critical the two should have the moral fibre to resign if they cannot deliver and follow the example set by Dr Sheikh's predecessor Shaukat Tarin who would long be remembered for taking two decisions: first, to insist on third party audit of rental power projects in the cabinet and, second, to resign when his advice was not heeded though; ostensibly he resigned because of 'personal reasons'. It is now patently evident that neither of these gentlemen can deliver - Dr Sheikh goes running to PPP's co-chairman seeking his intervention to convince recalcitrant coalition partners as well as opposition on nearly every issue. And in contrast to Tarin he has not challenged corruption within the cabinet even once. In other words he will be forgotten as soon as he loses his job.