EDITORIAL: Overwhelming evidence indicates that all sectors are suffering from a deepening malaise of, at best, inactivity to resolve the crises or, at worst, lack of technical skills by the decision-makers to take informed decisions in a timely manner and, in several instances, to this day.
The law and order situation remains under considerable stress and, disturbingly, the abuse being heaped on institutional heads, past and present, by senior leadership of all political parties is throttling all activity in the country other than what highly politically charged and polarised supporters are engaged in — both within and outside institutions.
The PML-N (Pakistan Muslim League-Nawaz) leadership is routinely attacking the superior judiciary while the judiciary appears to be split along partisan lines — a sad state of affairs that many political pundits claim is also visible within the establishment.
To add to this appalling state of affairs the recent protests in foreign capitals by Pakistan Tehreek-e-Insaf’s (PTI’s) supporters are further fuelling divisiveness within institutions as well as undermining efforts to combat the rising terror attacks domestically.
Within this worsening scenario the statement by Punjab Caretaker Chief Minister Mohsin Naqvi that the Punjab police chief has been given full powers to do what he deems appropriate, a decision that no doubt reflects the legitimate angst within institutions who cannot respond openly to allegations, is ominous as it may portend clashes that may lead to fatalities.
While one would hope that better sense will prevail across the political divide yet this would require sincere efforts by Interior Minister Rana Sanaullah to engage proactively with members of the opposition instead of issuing threats and dire warnings while accompanying the Senior Vice President of the party addressing the party’s workers conventions throughout Punjab.
In spite of periodic protestations of an imminent ninth International Monetary Fund review by Prime Minister Shehbaz Sharif and his Finance Minister Ishaq Dar since the mission left the country on 9 February 2023 the review remains pending.
The question arises whether the current economic team leaders have the capacity, read technical skills, to forge a deal at all and here the obvious conclusion based on the deferral of the ninth review scheduled for 3 November 2022 in the seventh/eighth review documents is that responsibility lies with the team leaders after the previous tranche was disbursed on 2 September.
At the risk of restating the obvious Dar not only did not implement the Memorandum of Economic and Financial Policies agreed by his predecessor Miftah Ismail, consisting of implementation of time-bound actions as well as structural adjustments, but also violated the spirit of the agreement with the Fund to ensure a market-based exchange rate.
The incalculable damage that these measures have had on the state of the economy require sacrifices by the relatively poor (through upgrading of utility rates/indirect taxes whose incidence on the poor is greater than on the rich) rather than the elite who were instead extended an unfunded 110 billion rupee electricity subsidy package (for exporters) on 6 October, which the government has since agreed with the Fund to abandon.
In this milieu for the government to announce a subsidy on petrol (motorbikes, rickshaws) by claiming that the funds would be generated through a cross-subsidy which would be in place within six weeks (administered through registration by the motorcyclists/rickshaws) raises several questions: (i) does it include public transport, in use by the poor and vulnerable?; (ii) using Nadra data to assess whether a motorbike owner is a legitimate beneficiary would be cumbersome for the petrol station employees, withholding agents, who would have to be trained to ascertain the customer’s eligibility or require additional staff with the required education to ensure the cross subsidy; (iii) petrol subsidy was announced by the then Prime Minister, Imran Khan, effective 1 March 2022 — a subsidy that was the root cause of the failure of the then Finance Minister Tarin to complete the seventh IMF review though he too had proposed a mechanism through which to fund the package.
It was not until the coalition government agreed to abandon the subsidy — in two phases (27 May and 3 June) — that the Fund began negotiating on the next review.
This should have brought it home to the wise that the IMF will not support unbudgeted subsidies, cross-subsidies or otherwise, and given that the ninth review remains stalled that all in government consider is critical for the economy today, this announcement defies any common sense, to say the least.
The acknowledged lacuna in the stalled ninth review is that the friendly countries have yet to release/disburse pledged funds; they are none the wiser as to the reason for the delay.
However, recent reports indicate that there is also a 1.5 to 2 billion dollars difference in estimates for the external funds required between the government’s claim and the Fund’s.
While during his previous stint as the finance minister Ishaq Dar was accused of data manipulation yet one would hope that this disconnect in our external requirements is not sourced to data manipulation but to lack of technical expertise.
The PML-N, the largest coalition partner, must review the performance of its key federal ministers and where foot-dragging is the norm or flawed decisions flourish they must be held to account without any further loss of time.
It’s the only reliable and certain method for the Sharifs through which they can brighten their party’s electoral prospects.
Copyright Business Recorder, 2023