A princess at bay
The recent increase of electricity rates has long been expected, that it did not come about during the last Federal Budget was not surprising considering the political imperatives at that time but it was only delaying the inevitable. While one may find it fashionable to criticise the Federal Government for buckling down under IMF pressure, it would be madness to suggest that any government would have been able to resist the conditionalities necessary for obtaining the relatively cost free funds available from the IMF, particularly in view of the need for refurbishing the sorely neglected infrastructure of the state inasfar as people’s comforts are concerned. That Ms Benazir’s Government has been able to fend IMF off for 270 days is credit-worthy on both the sides, obviously playing-safe filibustering by the Government and a mature restraint on the part of IMF to give the new administration some breathing time. The events of Venezuela and Jordan were afresh in the mind and the IMF wisely did not want to rock the boat of Ms Benazir’s fledgling democracy.
Any time that any of the utility rates are raised, there is bound to be inflation, the truth about the quantum is submerged somewhere in the gray area between the propaganda machinery of the government and the tantrums of the opposition, both honourable positions for political adversaries to follow as long as they do not resort to extreme measures, meaning that the hue and cry should be contained within the reasonable parameters of debate and does not lead to bloodletting in the streets.
For a resource-starved country like Pakistan, development can only be possible when utilities like electricity, gas, water, public transportation and telecommunications are paid for, the government cannot go on subsidising these forever unless it taps, into a rich lode of oil and/or gold. Even in oil-rich OPEC countries, the utilities charges are more than in Pakistan, we are the only ones virtually on a free ride, comparatively that is.
Someday someone has to bite the bullet, better it be a popularly elected democratic government, its institutional political framework intrinsically better capable of explaining unpopular decisions to the masses than an arbitrary martial law government normally insensitive to people’s feeling. For even balanced growth, it is necessary to make sure that the cost of the utilities are paid for by the public. IMF conditionalities do not mean that one loses one’s sovereignty, after all these are direct negotiations based on the available economic indicators that cannot be plucked out of thin air.
The early 1980s was a period of impressive economic growth but the chickens have come home to roost in the form of large internal and external deficits, the panacea being to go deeper into indebtedness. No wonder that inflation has multiplied manifold into double digit numbers. Ms Benazir inherited an abysmal economic scenario rent asunder by the aberrations inflicted upon it by the Economic Chameleon Extraordinary of the 20th century Dr Mahbubul Haq, who emulated Dr Joseph Mengele in mangling up the body economic of Pakistan. A brilliant but erratic genius, the good doctor, has pushed off to greener pastures after his devastating experiments on Pakistan’s economy. Significant structural problem in the economy have emerged making the Ms Benazir’s administration, vulnerable as it tackles difficult economic decisions while trying to persevere with the support of the masses, who on their side have complicated matters by their raised expectations. While increased revenue generation and better expenditure control to solidify the fiscal situation is the main aim, coupled with it is structural reform in the area of trade and industrial policies.
The assumptions of foreign analysts about the Pakistan economic situation provide that political stability be maintained and there be no dissipation in Pakistan’s international credit-worthiness, both very optimistic in the circumstances. Based on these, one can expect moderate to good economic expansion and control over the budget deficits with some reduction in the current account. At the same time with remittances continuing to decline, further worsening the balance of payments, the inflation rate has soared and thus with import growth outstripping the exports, the targets set for 1991 are unrealistic.
Ms Benazir’s Government may have to take much more difficult political decisions if the 1991 targets are to be achieved, in the face of the need to consolidate one’s political decision, this is going to take some doing. With gas rates having gone up in December 1989 quietly and the electricity rates creeping up till the sudden August jump, the cost of living has already gone up and one cannot see the Government politically capable of taking the really correct economic decision of withdrawing the food subsidies in one jump or go in for the introduction of VAT. As regards imposition of the agricultural tax the buck has been passed on neatly to the Provincial Governments who do not see a Joan of Arc role for themselves at the hands of the powerful agriculture lobby (almost 90% of the legislatures).
All is not lost however, given Pakistan’s well diversified economy, growth rates of 5% have been forecast as achievable, with cotton and wheat exports, Pakistan’s main export earners doing even better. Above all Ms Benazir has shown a refreshing willingness to come to grips with the problems. Political astuteness has dictated caution but the very realisation by those at the helm of power that structural changes have to take place is indeed very welcome. One of the decisions about privatisation a la Thatcher in utter contrast to the PPP’s declared manifesto, indeed overturning their previous disastrous nationalisation, is indeed very welcome.
The political scene is very bleak, however, and not very surprisingly. Some of Ms Benazir’s current problems have been self-created by her small army of advisors, of whom only three, Gens Babar, Imtiaz and Mr V A Jafarey are of any significance to political and professional maturity necessary in these troubled times. She does not seem to have a genuine inner circle, a “kitchen” cabinet so to speak who can give her clear unadulterated advice and comment without vested interest, some people who can really tell her right from wrong without the fear of falling from favour (particularly ill-suited Ministerial chairs). This is a must for her, without listening to the unvarnished truth, she will be flattered by sycophants into political oblivion. She has to react politically to attacks on her, her restraint will have greater effect than any wild counter-allegations.
Her finest moment recently was at the Lahore Airport, when meeting the President of IJI, Mian Nawaz Sharif, she talked about debate and argument being a part of the political process, very Prime-Ministerial. Her cool and calm, aptly reciprocated by her principal political opponent, was what we want to see, civility in behaviour, not the goonda-like tantrums of some ministerial minions on either side on the loose.
Pakistan is in the throes of economic crisis and the uncertain political environment, particularly a crisis of identity in Sindh, cannot aid in the solving of dire issues as it hinders the taking of tough policy decisions. We need desperately to control inflation, not engage in political vendetta, the vicious circle can go on forever. Increases in rates will certainly lead to inflationary pressures, these need to be controlled. By launching political initiatives aimed at revenge rather than economic emancipation, the PPP Government may be creating the perfect double-trap for itself, dawned if you will, damned if you won’t. There is a time for everything, at this time economic issues are paramount. One must function like PPP Superstar Aftab Sherpao in the Frontier, with the IJI on the offensive to remove him from power, he has gone on a economic Blitzkrieg, so that even his political opponents acknowledge his sagacity at tackling the real issues of people’s problems.
Ms Benazir is a Princess on the defensive, in a political and economic corner, the political one mainly of her own party’s making. There is no doubt that she is giving a fine account of herself, this experience in political survival will help her in good stead for many years to come. Very much like Liddell Hart’s “Indirect approach and Deep Penetration”, she has to devise a policy to outflank her political opponents by taking tough, far-reaching economic decisions. For her opponents, one can only hope that they will have the national interest at heart by not opposing those decisions that they would themselves take to better the economic prospects of Pakistan if they were in power. Trouble in the streets would worsen the economic situation and while taking of political initiatives to come to power is well within the IJI rights, anything that effects the national solidarity or economic balance must be avoided.
On her part, Ms Benazir should hasten to rein in some of her immature political minions who have no earthly idea of politics except that power enhances their ability to make money. It doesn’t take long for corruption to be laid at the doorstep of the leader, and that would be a real tragedy, for her, and given her extraordinary potential, for Pakistan.
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