Magic Wand or IMF Stick?
What others would not attempt in a lifetime, Moeen Qureshi’s Administration has carried out in less than eight weeks. MQ has had the courage to face upto problems affecting the lives of a majority of the Pakistanis in supersession of the motivated interests of a privileged and elite minority, a class act by any standard of measure.
The imposition of tax on agriculture wealth was always on the cards but could never be enacted because the mainly agriculture-origin legislators subscribe to the fact that charity begins at home and have thus been less than enthusiastic about such suggestions. Levying a base of 4,000 Produce Index Units (about 50 acres) in supersession of the 3,200 PIU threshold recommended by the Sartaj Aziz Agriculture Commission of the 80s, MQ has ensured that for the first time the tax burden will be shared by the rural majority with the urbanites. Similarly the loan defaulters list has always been a sacred cow, a leading media magnate (whose name was on the list) protested that disclosure and action against the captains of commerce and industry would deter foreign investors, this is the stuff of nonsense! Has the US been defamed by the jailing of billionaires like the Milkens and the Boeskys? When a borrower violates the trust with the lender by not returning the loaned amount, what are the grounds for maintaining confidentiality, only that it provides a fig leaf to the defaulters in escaping accountability? Despite the fact of two of his Honourable Ministers having been “mentioned in dispatches” as defaulters who had their loans written off, MQ went through with the exercise. Publishing the names of defaulters is not enough, what about those Bankers who collaborated in the loot by sanctioning the loans, what about those who accepted the fake collaterals given and above all what about those who decided that the loan and mark-up thereof should be written off? Going only after the potential legislators is also not enough. Justice demands that all these people should be put on the Exit Control List (ECL) and the entire property of these individuals (and their immediate family members) should be confiscated to pay for the amount of default, that is what will separate MQ from those who talk only and those who deliver.
To move against drug smugglers is indeed a brave act, in many ways we had exceeded the depths of the “Medillin Syndrome”. The rule of law is presently in the hands of those who can afford to manipulate it to their will, mainly drug barons. Virtually a State within a State, private militias with sophisticated weapons were serving the writ of drug barons with their “jurisdiction”. Their predecessors, the gold smuggler of the 50s and the 60s have already entered the Assemblies and have become pillars of society, commerce and industry. With their advent into the legislative Assemblies, the manifold wealth of the drug barons (and their scions) would permit them to possibly become our potential leaders in the 21st Century. Similarly non-payment of utility bills, gas, electricity, telephone, water etc by the elite and the influential had become endemic, causing great pressure on the socio-economic infrastructure with respect to modernisation and maintenance. MQ’s insistence on publishing the list of defaulters should have the desired effect in recovering overdue bills. One expects that tax default is an important factor in the series of initiatives that MQ is taking. While he is at it, why not use the services of the private sector to identify those tax officials who are found living beyond their means?
MQ’s penchant for accountability without succumbing to Special Interest Groups has been like a whiff of oxygen to those suffocating under the burden of ever-increasing nepotism and corruption, it has encouraged other pillars of the State to do their bit. This was the type of action expected under Martial Laws (ML), however after fine starts and proclamation of lofty ideals and objectives, all MLs degenerated into self-seeking exercises compounding nepotism and corruption. The publishing of lists galore of those fortunate to be awarded residential and commercial plots in utter violation of every ethical code of governmental conduct goes to the credit of Justice Tiwana of the Lahore High Court who had the courage to exercise his suo-motu powers in the new environment. By doing away with PM’s discretionary powers to allocate plots to friends and relations, MQ has set a precedent that that will be virtually impossible for future governing incumbents (PM or CMs) to roll back. The corrupt do not leave traces of their guilt but MQ’s initiative in setting Justice (Retd) Samdani to do a report on corrupt officials will certainly have a salutary effect. Those living beyond their means may not enjoy their illegal gotten wealth with the same impunity they have done uptil now. Technocrats like MQ usually have to depend for survival on (and dare not touch) bureaucracy, it speaks volumes for MQ’s tenacity in keeping to his statement of aims and objectives. A positive indication of his good and sincere intent will be seen in how he overcomes the bureaucratic filibuster to avoid such action before Oct 6?
On being chosen as Caretaker PM, MQ was not only seen as neutral but was expected to keep Pakistan economically afloat through the worsening economic situation which really began with the worst floods in Pakistan’s history and continued because of the state of limbo that existed after Ms Benazir’s failed November Long March. A day before leaving Government, Nawaz Sharif had devalued the Pakistani Rupee by 3% against the US dollar. This was a step in the right direction to reinvigorate our dwindling exports but was not enough. Soon after taking over, MQ devalued the Rupee by another 6% plus making a grand total of more than 9%. As much as it hurt, there was no way we were going to match China and India’s surge in textiles from taking over our traditional markets in its entirety. However, GoP’s announcement on 19 Aug 93 increasing prices of utilities, petroleum and ghee as well as indicating future intent to raise the price of wheat was not well thought out. The reaction may not have been immediate and swift in the streets but it did culminate in a partially successful strike called by the Pakistan Islamic Front (PIF) and unofficially supported by others on Sept 2, 1993. Taking advantage of his presence in the Senate, some JI (now PIF) Senators attacked this policy of price rises as being dictated by IMF. Rising in defence, MQ quickly confirmed two things, viz that (1) in reacting quite vehemently he was far from being politically astute (and as such thick-skinned) and (2) that he was a gifted and confident orator with great political potential. Lacking local political experience, the Caretaker PM came across as a Corporate Boardroom executive who had not quite grasped the sensitivities that Third World street smart leaders must have in dealing with the populace of an impoverished nation. Defending the rise in prices, he very rightly blamed it on the cumulative economic policies of all previous Governments, but in singling out Nawaz Sharif’s “yellow cab” scheme he was right and wrong at the same time. The “yellow cab” scheme had started well and was useful in solving the transportation problem to an extent but it had gone out of control and a more restrictive policy should have been implemented so as to control imports of cars of all shapes and sizes. Particularly in the month of June when a run on the reserves is normally on the cards, Sartaj Aziz would have been well-advised to put a cap on the yellow car flood. However, it was only one of the few economic aberrations of the previous Government, for the most part the Nawaz Sharif regime deserved an A plus for their economic performance. Having pushed the economy for all its worth, Nawaz Sharif was left paralysed because of the GIK imposed freeze with the downside of a transient economy without adequate checks and balances.
Despite his intention of not becoming a political giant, MQ has become a force to be reckoned with because of the bold steps he has carried out so far. One may agree with the fact that a rise in prices was necessitated, particularly in view of the high interest short term debt becoming due and the lack of access to cheaper (World Bank/IMF type) credit. However whenever there is devaluation one has to hold down prices so as not to allow inflation to get out of hand and hit the common man. Unfortunately pledges made to the IMF by previous Governments to remove/reduce subsidies and to reduce the deficit had to be fulfilled before easy credit could become available. The Catch-22 is that the raising of prices along with devaluation has meant that they have mutually fuelled each other and we are now in a price rise spiral. Rolling back ghee/atta prices by various mechanisms may have helped but the psychological damage had been done. Why take actions that one cannot sustain? Raising of prices needed to be spread over months, not imposed arbitrarily in one day. At the same time, the many initiatives of loan repayment/recovery, tax recovery, payments of utility bills, etc would have more than made up the deficit if action for recovery was implemented in earnest.
On July 20 1993 foreign exchange reserves were at a low of US $ 185 million, with about a week/two weeks imports. Certainly they were grounds for apprehension but not alarming enough to cast undue aspersion on Nawaz Sharif Government’s economic performance. A study of the last ten years of the State Bank of Pakistan figures will show that traditionally July (and part of August) is the leanest period for foreign exchange reserves. This is because almost 20% of the import LCs of the whole year are opened in June to beat the 30 June financial year deadline and commensurately less than 5% of all exports (below the monthly average 8%) takes place in July. Pakistan has thrived in previous years on even one fourth of the foreign exchange reserves available in July 1993 so we were not really bankrupt comparatively as claimed by the Caretakers in defending their price rise decision.
One feels sorry that there seems to be a growing perception that MQ seems to have become less than neutral. This man has turned in an amazing performance and deserves all the praise and respect we can give him and then some more. However, if one were to single out one individual as more responsible than anyone else for our economic woes, late Gen Ziaul Haq’s economic Czar, GIK, circa 1977-1985, would be the odds-on favourite. More than anyone else, GIK can also be singled out for the political apocalypse he almost visited upon this country during the months January to July 93 when Pakistan was held as an economic, political and social hostage to his whims and caprices. In such circumstances whatever his personal inclination, the highly publicised MQ visit to GIK in Peshawar gave a wrong indicator of his preferences in this present crisis and electoral process thereof. It is normally incumbent upon him as Caretaker PM to exercise more discretion in the present delicate political environment about things that may sway the choice of the common man.
Overall MQ gets an A PLUS for his many reforms, a B PLUS for economic performance but a B MINUS for not co-relating economic necessities of the nation with political sensitivity about the needs of the masses. MQ has indeed waved a magic wand but from time to time it unfortunately seems to look very much like an IMF stick.
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