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Initial Reviews
The visible primary difference between Caretaker and elected governments is that being unaccountable to the people and with no lasting commitment to the nation, the MQ Regime could enact any number of reforms and give forth any number of pledges in the comfortable knowledge that neither were these strictures binding on the successor government nor were they answerable to anybody. In a space of 90 days, a sophisticated image building exercise raised the expectations of the people, this was bound to become an albatross for any elected government in comparison. What was conveniently left unsaid was that though every elected government may have similar ambitions they are constrained in the implementation of their promised policies post-election by political realities.
Having been in business only about 45 days or so, Ms Benazir Regime should not be expected to conjure up any economic miracles. Furthermore, economic initiatives seldom make immediate headway towards their objectives even though measures that seem punitive will always get an instantaneous antagonistic response in the streets. Most of the “dirty work” as regards imposing additional limitation at the behest of the IMF had already been done by the MQ Administration, but the additional conditionalities agreed to by MQ is unfairly shackling the present incumbent for a three-year period. For the record, the revenues acquired by the extra MQ measures of taxation are projected at almost Rs 10 billion, an almost 50% backbreaking increase on the Rs 20 billion proposed and voted for in the annual Federal Budget guided through by the then Federal Finance Minister Senator Sartaj Aziz. Many more IMF conditionalities were accepted by the MQ Regime than were by former Finance Minister Sartaj Aziz in April 1993 but the IMF has still not released the Standby Facilities. In effect the IMF has conned us into a three year captivity without giving anything in return and now want more from the Bhutto Regime. The quality of life of our citizens will thus deteriorate further as their spending power decreases. In hindsight we should not have let IMF-pensioner MQ negotiate with his parent institution. Further the tax burden should have been better focussed towards the higher income group.
A Budget with Substance
The knowledgeable are usually convinced by substance, form is for public consumption. The Federal Budget can only be eulogized when considered in the light of circumstances prevailing that caused the GDP to register a lowly 3% growth rate, in the sense that it comes out better than anticipated by the public at large and the intelligentsia in particular. A complete package of direct and indirect taxes was predicted but the relief on being spared draconian measures makes the proposals look comparatively rosy. While the Budget contains much of substance in keeping with the existing economic realities, on few crucial issues it was terribly short on form, that which influences public perception. One cannot defend the indefensible but showing flexibility and dexterity on these issues, the Finance Minister moved quickly to defuse such anomalies before they became politically volatile and contentious much out of proportion to the main thrust of the Budgetary proposals.
The unenviable task before the Finance Minister was to restore the momentum of the government’s liberalisation programme as well as the confidence of free enterprise because these form the main fuel for the IJI’s economic strategy. In order to do this, he had to continue with emphasis on development while reducing tariffs across the board, a veritable Catch-22. By giving further incentives to industry, he signals his commitment to generate employment, he also had to shuffle with alacrity to keep his indirect taxation proposals from adding to the inflationary pressures. The Opposition in the National Assembly was quick to level the accusation that the Finance Minister had fudged the statistics, particularly covering up the deficit, which they claimed was more in the region of Rs 110 billion in comparison to the stated Rs 85 billion. We may be in an imperfect world and if the Honourable Senator has under-estimated the actual deficit, we believe that the Honourable Opposition has rather exaggerated it. In either case, the deficit is too large by half and the Administration would do well to keep it within reasonable limits or we may have to use wheelbarrows to carry the volume of cash required to bring back a loaf of bread a la Germany circa 1928. There are certainly severe inflationary pressures, some due to circumstances beyond the Government’s control but some that could have been avoided by correct prioritization after a deliberate analysis.