Shaukat Proposes. Who Disposes?
Some people have their destinies written in the wind, ephemeral in character this disappears like chaff in the face of any crisis. And in any case the wind cannot read. This may or may not be so for Shaukat Aziz, Finance Minister-in-waiting for almost every government in the last decade. With full-time cover of a military regime Shaukat finally got his chance to define how he would govern the economic health of the nation and look after the well-being of every individual citizen, if not till Kingdom Come, maybe for the next three years, or at least for the next year. As “Mission Impossible(s)” go, Tom Cruise had it much easier, and then he had distractions of the other kind, the kind that is anathema to the Ulema who hold Pakistan hostage intermittently. Abandoning the “best dressed list” for the standard bureaucratic white shalwar-kameez, black waist coat outfit was out of character but symbolic. Whatever magnificent plans Shaukat may have had for Pakistan when in faraway land, like the Romans do when on Pakistani soil you do exactly as the bureaucrats want you to do. And when you have the fudgers-in-chief of the last 4 regimes surrounding you, one hardly has any choice.
The abolition of the wealth tax was absolutely brilliant, however this was “a Pindi-dictated” initiative not a Shaukat Aziz one. Wealth tax has been the subject of misuse of discretionary powers by the CBR personnel and the abolition of it must have left CBR shell-shocked (maybe of the self-propelled kind). He came up roses in consolidating of Provincial taxes from 30 to 9. If you own a business you would know how different Departments can drive you crazy taking full advantage of levying some unknown tax, harassing and intimidating you with penalties, incarceration, etc till you cough up. However CBR had the last laugh, importers will now be held to blackmail for “under-invoicing” at the discretion of the Principal Appraiser (PA), the threat of confiscation by Customs Collectors (who will never dare disagree with the PA’s observations) will be very real.
The Bill O’Reillys of the World
The National Accountability Bureau (NAB) is reported to have signed up with a number of assets-tracing firms for recovery of the billions that have been looted from Pakistan. Since NAB officials have been going to London and New York, the safe bet is that most of the agreements, believed to be on percentage basis without a contingency or mobilization fee for expenses, have been signed up with western firms. This is indeed very welcome news and though one has reservations about the credibility and integrity of some elements associated with NAB, one must congratulate them on this initiative. No doubt some well-known foreign firms have a tremendous capability to uncover assets, however NAB must be careful and blacklist those firms who dragged their feet for reasons unknown when they were previously employed by Pakistan. The recovery itself will be a long, legal process that takes some doing because the accounts and assets are mostly never directly in the name of the person who stole the money but in a myriad number of off-shore firms, names of close relatives, etc. The financial structure is done with the aim of avoiding discovery. One owner of US$ 500 million plus in assets abroad claims ingenuously that these are all his wife’s business and since she is British, she is not accountable to Pakistan. One may well ask, what fortune did his wife inherit and/or what business was she engaged in to successfully acquire all this wealth abroad?
Due credit must be given to NAB for nabbing one of this country’s virtually untouchables, the owner of a huge business empire that specializes in the sophisticated evasion of taxes, custom and excise duties. Protected by a combination of bureaucrats on their payroll (including some from the investigating agencies) as well as brilliant lawyers who sell their conscience for a fat fee (and should themselves be investigated for evading taxes, since their honoraria is received in cash and mostly in foreign exchange), these characters have acquired such power and influence that they have actually managed to have a beach within the precincts of the city reclaimed using the cover of creating of a public park, probably the first in the world and without a murmur of protest from any environmentalist. Another major tax-evader who was being pursued by a previous CBR Chairman is flourishing on the basis of his “connections” in the present arrangement. Coincidentally, these characters jointly own a major western franchise, a convenient arrangement not only to launder black money but also to make their reputations kosher. One generation later nobody will remember how they made their fortunes. And a government minister who knows (or should know) has the effrontery to call these people as young “dynamic entrepreneurs”. The fact that at least one of the groups has been hauled up by NAB, despite their professed “connections”: speaks well of the integrity of the accountability process, no doubt the days for the others are also numbered, subject to the influence they wield, of course.
Accountability
While everyone seems to understand that the first priority of the military regime should be the economy, public anger about the loot of the national treasury engineered over the last 50 years (but far more pronounced over the last two decades) makes accountability the primary objective in the public perception. For “the great silent majority” who have seen the quality of their lives deteriorate even as a privileged few became rich beyond compare, it is important to take the looters to task. The disparity between the haves and have-nots has to be seen to be believed, the middle class has virtually been wiped out, bringing the 23% of the nation’s poor to a high of 40%. Since the economy is inter-connected with the accountability process the success of the government will lie in effecting a fair but ruthless exercise in this respect. What is recovered of the ill-gotten wealth will show up in the balance sheets of the nation’s economy as positive cash flow. The credibility of the Chief Executive and his team will largely rest in the public perception of whether and how accountability is carried out, without fear and/or favour or selectively and/or as an eyewash.
One of the first moves of the Chief Executive has been to appoint newly promoted Lt Gen Syed Mohammad Amjad as the Head of the Accountability Cell. Amjad who has an excellent reputation both of integrity and competence, will have his work cut out for him even though he will have the benefit of having plenty of material on politicians and some bureaucrats from Ms Benazir’s period of rule about Mian Nawaz Sharif, friends and associates and likewise during Mian Nawaz Sharif’s governance stint on the likes of Ms Benazir, etc. Sifting through the material to locate fact from fiction will be quite an exercise. This represents just the tip of the iceberg when one takes into account the highway robbery carried out on a wholesale and continuing basis by the bureaucracy for over five decades. To assist the new head of Ehtesab, the Chief Executive has made an excellent choice in Maj Gen (Retd) Inayatullah Khan Niazi, a man of impeccable character and integrity. A soldier to the core Gen Niazi has a history of being blunt, forthright and unswerving in doing the task given to him. Together they will make an excellent team.
Glimmer or Mirage?
While the pall of dark economic gloom continues to hover over us, some short-term indicators have started to twinkle. We continue to face a horrendous economic situation, deepened by a chronic shortfall in revenues. The magic revised figure of Rs 305 billion is still almost Rs 100 billion away in the last quarter, there is the glimmer of hope that the worst may have bottomed out and we may finally be on the road to the elusive economic recovery.
For the common man there is no issue more sensitive than food, followed by water and electricity. Last year, due to faulty projections the last elected regime defaulted on adequate imports of wheat stocks on time, with the Caretaker regime maintaining the status quo of inertia, there were “atta” riots as wheat stocks plummeted. Some PML stalwarts in Sindh took advantage of the situation to turn “atta” into gold. Wheat in tons went across the border, primarily into Afghanistan but also into other adjacent regions. This time around, the government was taking no chances and fully 4 million tons of wheat has been imported to add to the surplus stock held because of last year’s excessive import. Add to this a bumper crop this year and we are fairly wallowing in wheat. This bumper crop has been due to policy initiatives in agriculture, where the agri-credit was raised from Rs 12.5 billion to Rs 30 billion, allowing farmers a 1:2 ratio of DAP to area instead of 1:4 ratio they previously used. With support price raised, this has resulted in 12-13% increased production with 4% increased average, a 2 million ton increase. To this add the success of the Canola crop in reducing our edible oil imports by an additional US$ 300 million last year and almost US$ 150 million this year. With a world-wide slump in textiles, our domestic cotton off-take has been reduced and we have an importable surplus, enough at least to keep feeding our traditional markets. Even though our textile made-ups have gone down considerably, it has been somewhat made up by a sizable spurt in the manufacturing sector, up by almost 16%, almost 60% of it policy-related. The most significant manna has come from heaven as oil prices have crashed the world over, saving the foreign exchange earmarked for this purpose. If “el Nino” holds back in Sindh where the wheat harvest has already started and any rains would play havoc, things may well look up considerably.