Deja vu?
The state of the economy is precarious. The head of government did not resort to subterfuges and minced no words in confirming what was more than just a suspicion, in the past few months we had reached a climax of sorts in being systematically sold down the river, flags waving and bands playing. While surreptitiously and simultaneously signing away our options, our ex-financial genius (and part-time politician) was extolling the health of the economy, so much for intellectual honesty. Safe within the portals of the Senate, he now informs us that he had only signed a “Letter of Intent” and not an agreement which, he remonstrates, the present government is free to re-negotiate, conveniently papering over the fact that an Intent is an agreement in principle and successor governments run the risk of being ostracised if they do not honour sovereign commitments once made. Irrespective of the fact that the state of the economy justified the agreement in principle and the extent is not disputed in the circumstances, the manner and timing is simply deplorable, so was the Hobson’s Choice given to any new government. It was a loaded weapon and Ms. Benazir’s decision to avoid adventurism was pragmatic inasfar as it avoided the Catch-22 type trap manifest in re-opening the arguments, more power to the new government’s financial brain trust that they chose to roll with the punch.
Considering that Dr. Mahbubul Haq, Economic Chameleon Extraordinary, had left the economy in shambles with a severe case of terminal disease, the emergent tackling of the Federal Budget by the PPP gives hope. Innovation and revolution, if any was envisaged, has been delayed till June next year. The most maligned and eminently despised Federal Budget in Pakistan’s history (also known as Dr. Haq’s Folly) saw few drastic mid-term changes. Characterised by the confidence and the aplomb of the knowledgeable intellectual, Dr. Haq did not in the first place (1) attempt enough (2) whenever he did so it was done without taking the outcome into consideration and generally (3) he vacillated. The bad news is that the PPP Government has had to compromise with the IMF’s stringent terms imposed as part of the financial rescue (or bail-out) package, the swift and pragmatic handling is expected to contain the economic damage inflicted by financial policies conceived selfishly. The government has avoided the temptation to play to the mass audience and offer any short-term populist solutions.
Mr. Junejo must be relishing the fact that his FIVE POINT programme scuttled by ex-loyalist Dr. Haq (fellow Muslim Leaguer and IJI stalwart) in the last June exercise has now been restored in a salute to populist aspirations by the re-named Peoples Development Programme. Rs. 2 billion reflects the modest nature of the exercise but vindicates the theory that there is not much difference between any of the major political parties, a matter of style rather than substance, emphasis being on diverse personalities making up the polarisation manifest in the political scenario. Proper lip-service has been maintained in the various populist aspirations such as provisions for housing, gas, electricity, transportation, etc. Where Ms. Benazir is going to get the money, God alone knows, keeping the bureaucracy financially afloat is going to keep her hands full, though sending some of them on leave without pay would be beneficial all around. Various pro-forma financial adjustments have been made to garner additional resources by re-imposing sales taxes on certain categories, while withdrawing excise duties on certain essentials for the poorer among the masses. Mr. Piracha had rather a strange way of reducing the deficit to control the inflation rate, he raised the dependance on foreign aid marginally. If he can control demands for wage increases in the face of increased taxation then the inflationary spiral may still be controlled. Then it gets curious-er and curious-er, the adherence to a liberal import policy will seriously deplete the already severe liquidity position in our foreign exchange reserves, while the control of essential prices may drive our farmers back to safer cash crops causing further shortages in wheat, sugar, etc in the coming year. Mr. Piracha was waffling a bit at this stage, excusable in the face of the horrendous economic situation, rhetoric will hardly get us out of this mess.
The Karachi Stock Market usually works out of sync with the other stock markets of the world, artificially buoyant as our economy is with the black money and other aberrations. However they greeted the PM’s announcement of full restoration of trade union activity with the time honoured principle of taking a collective nose-dive. The apprehension that Presidents of Banks (sic MCB) would soon be pelted by rotten eggs (as a sign of healthy trade unionism) is hardly conducive to restoring investor confidence. On the other hand, Ms. Benazir’s popularity among the masses acts as a check on unhealthy practices among the unions, particularly their penchant to resort to extra-legal means to get their way. Trade Unions are a must in any democratic society except those classified Essential Services, which should encompass all services affecting national security or those personnel in any form of security protection duties, otherwise the whole edifice may collapse. It is important to encourage trade unions so that they can safeguard the basic rights of their members, at the same time Ms. Benazir can ensure, with active collaboration from the opposition ranks, that union activity does not degenerate into lawlessness, anarchy in turn acting as a death knell to an economy already under siege.
Perceptions are important here and a sure hand on the controls will serve the economy — and in extension the masses — much better by ensuring healthy precedents being established. At the same time, the Government has excellent institutions — Employees Old-Age Benefit Institution, Employees Social Security Institutions, etc instituted during the last PPP regime, it must become incumbent to ensure the de-corruption of these units, coming down with a heavy hand on those employers who have defaulted in paying their legal dues meant for the benefit of their employees, as also the active collaborators and connivers among the institution itself. Let the Labour Minister get his house in order, he will find that trade union activity will be positive in contrast to his becoming a hostage to extremists.
Unlike George Bush, Ms. Benazir did not go through the election campaign saying “watch my lips” and therefore did not find it difficult to impose symbolic taxes on the very rich. That is as it should be except that one hopes that in the next budget Ms. Benazir may broaden the tax base while making the tax net more sophisticated, somebody has to start the taxing of agriculture income sometime, better it fall to a democratic government to impose the will of the masses than a Martial law regime.
The conservative portion of the populace are usually wary about a democratic government’s attitude towards defence spending, in this case it actually increased 9.9% for a six month period, showing the sensitiveness elected leaders have towards national security. It is upto the military now to respond in kind, to get more bang for the buck while restoring the equilibrium of civil-military relationship. Considering that one has to control double-digit inflation while satisfying populist promises made to the masses, this political gesture of sacrifice is manifest of the highest patriotic feelings, skeptics please take note.
Ms. Benazir Bhutto can also explain the necessity for a cantonment at Pano Aqil better to the population of Sindh than any General can and that is as it should be. A similar attitude towards the energy problem and Kalabagh would probably be asking too much, but then who knows what the power vested by the electorate can do for positive decision-making?
One jarring footnote of history being repeated needs to be mentioned here. One always sets someone to catch someone, as the old adage goes, but Gen. Tikka’s appointment as Governor of Punjab, raises some historical connotations inasfar as his once-upon-a-time appointment as Governor of East Pakistan (and Commander Eastern Command) in 1971, was taken by East Pakistanis as a declaration of war. What an irony of fate that he has to be sent to his home province of Punjab in an almost a similar role seventeen years later. Perhaps he has mellowed since then (Balochistan does not have happy memories of him either) but the confrontational style in politics could have been avoided. The display of pragmatism in the field of economics in order to avoid adventurism (Ms. Benazir’s own words), has confounded hardened skeptics of PPP’s so-called extreme policies. More than economics, the Centre must compromise with the largest province, the sooner the better to avoid the deepening polarisation. Mr. Ghulam Ishaq’s emergence as a consensus candidate for President of Pakistan has been a part of the overall process of adjustment between the PPP and the IJI. Wisdom demands that a dialogue is started in earnest at the earliest, there is much to gain and all to lose. Mr. Nawaz Sharif is the leader of Pakistan’s largest (and most vilified province), he has to accept that at the national level, Ms. Benazir is Pakistan’s elected leader. The triumph of Ms. Benazir cannot be complete without being the Prime Minister of all Pakistanis in which acceptance of the fait accompli in Punjab is a must for starters.
As the national budget has shown clearly, PPP leaders are not novices at the helm of the national affairs. The last ten days were good for democracy in Pakistan — the Federal Budget being relatively painless. Mr. Piracha has demonstrated that anyone from Bhera can do it, given perseverance, good advice and pragmatism. It does not need a Dr. Haq to be our perennial saviour from economic doom. If Pakistan is deeply in the red, it is because of Dr. Haq’s extended tenure as the Minister for Planning, then also Finance, then also Commerce and then all the rest together. No other man ever existed in Pakistan as a more powerful economic Czar, as the ultimate necessity for re-negotiation of the debt structure has shown that he botched the job.
The ability to be honest about one’s tasks and achievements are the real hallmarks of greatness, being modest in accomplishment and the accepting of responsibility in adversity. The new government has shown a refreshing change in the handling of the public information (they manage to show Nawaz Sharif once a week), it is a political trait to be eschewed by all and sundry for the present and the future. We can lament about the past but it will not help us as much as genuine analysis, self-criticism and acceptance of all honest advice from all sides, whenever good for the country. The first ten days of government are the hardest, Ms. Benazir has shown that she is as tough as they come. For our sakes, we hope she keeps on being cautiously productive.
Somebody up there has started listening to our prayers — in all the senses of the word. Particularly in the economic sense, we need all HIS help.
Did you enjoy this post? Why not leave a comment below and continue the conversation, or subscribe to my feed and get articles like this delivered automatically to your feed reader.
Comments
No comments yet.
Leave a comment