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EDITORIAL: There is a looming economic crisis due to the paralysis within the federal government to implement critical remedial measures and, what must be of extremely serious concern to all the stakeholders, is the narrowing time window with each passing moment given that the last date for the passage of the budget is 30 June 2022.

While one would naturally assume that the eleven-party plus coalition government may be finding it a challenge to formulate a consensus budget especially given the need to reverse the unsustainable increase in “unfunded” subsidies announced by the then Prime Minister, Imran Khan, on 28 February yet, surprisingly, the main challenge appears to be from within the Pakistan Muslim League-Nawaz (PML-N), which holds the portfolio of nearly all economic-related ministries that need to take policy decisions with serious negative political repercussions.

The stark economic reality was appreciated by the PML-N during the tail-end of the Khan administration. Moreover, the incumbent Finance Minister Miftah Ismail agreed with the International Monetary Fund (IMF) team in Washington DC that the government would withdraw the unfunded subsidies, with a press release issued to that effect by the IMF on 24 April, and yet he has been unable to deliver on that pledge after the passage of more than two and half weeks.

This remains the primary reason why no date has been set for the seventh review talks though the Fund’s resident representative in Islamabad envisages that talks would begin this month no doubt premised on assurances by Ismail and previously by his predecessor Shaukat Tarin that the stalled review is critical for the economy — a stance fully supported by Business Recorder given the dwindling foreign exchange reserves that are insufficient to meet more than two months of imports, with more than 50 percent sourced to debt, an eroding rupee vis-a-vis the dollar indicative of serious underlying economic malaise, and a historically high unsustainable budget deficit.

It is unclear whether the government has begun to engage in the budget framing exercise though needless to add a budget that assumes the IMF seventh review success would be markedly different from one that assumes it has been deferred in terms of (i) projecting foreign exchange inflows from multilaterals and bilateral and expenditure for next fiscal year — current and development; (ii) the tax targets which require reforms that are politically challenging; (iii) the circular energy debt that is at present around 2.5 trillion rupees and no longer exempted from the calculation of the budget deficit as per the ongoing Fund programme; and (iv) the non-tax revenue sources.

These are critical questions whose answer would be contingent on the negotiations with the Fund and there are reportedly two schools of thought in the PML-N. One that argues in favour of a new IMF package, though the assumption which is almost certainly flawed is that they would be better negotiators than the previous economic team.

This view translates into supporting immediate elections that would provide a honeymoon period for the next government to take these politically untenable decisions; while the other school of thought is reportedly arguing in favour of implementing the reforms which are necessary and hopes that the economic turnaround happens before the end of term of National Assembly.

Confusion prevails within the PML-N ranks as regards the tenure of the coalition government. Ranking members of the party continue to issue contradictory statements as regards the timing of the next general elections.

In this background, when there is a sizeable group within the party that is in favour of early elections within this calendar year, it is, therefore, bewildering that any attempt to bring in legislation for undoing the amendments made by the PTI government in electoral laws as regards use of electoral voting machines and granting voting rights to the Pakistani diaspora, perceived as one of the major reasons for the opposition’s vote of no-confidence remains conspicuous by its absence.

This delay in tabling of such an amendment that all parties within the coalition unanimously view as an imperative for holding of the next general election is emblematic of the confusion and paralysis within the coalition government.

There are also reports that the government may consider declaring a ‘financial emergency’ that would surely be opposed not only by Sindh, an ally, but also by Khyber Pakhtunkhwa or calling early elections paving the way for ushering in a caretaker government under the constitution that would be tasked to present the needed harshest ever budget in the country’s history.

This arrangement would spare the political parties of this onerous yet imperative action. Added into this mix is the deep rooted perception by a national party that its electoral support is at an all time high and in the event that the results are different from these perceptions charges of rigging would no doubt surface as has been the norm in this country in the past and which may assume more serious consequences given the deepening political strife in the country today.

Pakistan today is between the devil and the deep blue sea on an entire range of factors spearheaded by the economy but political turmoil with the capacity to deepen the economic malaise that we currently face may be a close second. One can only hope that better sense focused on the public good is allowed to prevail not only within political parties but also amongst all stakeholders.

It is, however, needless to say that better sense eventually gains influence after an argument or a struggle. The incumbent government must swing into action without any further loss of time in order to dispel the widely-held perception that its approach to myriad challenges facing the nation is unfortunately characterized by a state of powerlessness or incapacity to act. It either goes for snap elections or takes the bull of current challenges by the horns. There’s no third choice.

Copyright Business Recorder, 2022

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