Voodoo Policies or Noora Kushti? – Searching Questions. Ambiguous Answers
With the postponement of the visit of the IMF Mission to Pakistan, for all intents and purposes the economic battle lines seem to have been drawn with Pakistan heading pell mell into default. Already being labelled as an international basket case, it seems we have no choice but to unilaterally declare a debt moratorium. Within the grace period of a series of small defaults, we seem to be resorting to populist rhetoric to provide answers to the many questions that have arisen to bedevil this country. Because of the looming recession worldwide, temporarily arrested by lowering of interest rates by the US, Pakistan does not figure prominently on international economic radar screens, others being more vital to western interests. A recent article in TIME magazine clearly documented changing western perceptions vis-a-vis the continued integrity of a country once acknowledged as the cornerstone of US policy in the region, to its present outcast status as opposed to the interests of India. On a whole range of issues, political, social and economic, Pakistan is under severe pressure. Unfortunately instead of addressing the issues, Mian Nawaz Sharif seems to be adopting a confrontationist course, this is a deliberate policy that could well be a smokescreen. Is all this for real or are we the witnesses to an elaborate “sting” operation? There is growing suspicion (and uneasiness) that an agreement of sorts may have been reached with IMF on the basis of a secret commitment on CTBT, that all this bluster is meant to mobilise domestic public opinion. Whatever, this head-on policy has worsened investor’s last remaining confidence in Pakistan’s economy, they have been pulling out of blue-chip stocks even, leaving Pakistan teetering on the brink of economic catastrophe. Could this also be a ploy for raking in short-term profits? Maybe we are reading too much into conspiracy theories.
Eighteen months into his rule, the PM has thankfully discovered Karachi, the linch-pin of economic activity in Pakistan. The worsening law and order situation has actively contributed to economic apocalypse and general depression among the intelligentsia and the elite of the city. When the PM very rightly supported a suggestion by prominent concerned citizens for Metropolitan Police in Karachi, the bureaucracy promptly tried to shoot it down point-by-point. In a Catch-22 situation, how can they afford to give up power that ensures systematic chaos and confusion, that in turn allows them to rule the roost in the name of law and order without any check and balance? Not surprising, while the whole exercise is still a zero sum game, it has given a PR photo-opportunity to the PM to “show his concern for the people of Karachi”. The Rs.24 billion economic package will certainly be of indirect benefit to Karachiites in the sense of easing the transportation/communication problems for the benefit of those up-country but what Karachi needs is direct government investment in creating more jobs, both in the public and private sectors in the fields of education, health, transportation, electricity, water, sewerage, gas, roads and other community-oriented socio-economic infrastructure. What Karachi badly needs is local self-government. For such an elaborate scheme to be successful one needs not only political will and the money to back that will but also an honesty of purpose and dedicated approach. Unfortunately we are sadly bereft of these attributes. So unless we can come up with a miracle, the immediate and long-term prognosis is bad for the country. With contempt we noted when Kissinger labelled Bangladesh an international basket case, in the space of one day (May 28) we have gone into two different directions, we became a nuclear power, sort of, and simultaneously commenced our journey down the road to economic ruin.
IMF Conditionalities versus Economic Realities
The major reforms that the Bhutto government is depending upon to bail out the economy and the country from its present state of crisis are IMF dictated strictures such as (1) controlling of expenditures (2) increasing revenue collection (3) imposing financial discipline in public sector financial institutions (4) imposition of farm taxes (5) extending General Sales Tax (GST) to cover every product and (6) reduction of defence expenditures. It is only due to the existence of our very vibrant parallel economy that we remain alive and well despite being supervised by the most atrocious team of economic managers that this country has ever known. Since almost all social and political aberrations have origin in the economy, the social divide and political crisis we are immersed in can be said to be caused by the partial failure of the economy, directly attributable to mismanagement.
Whereas most of the reforms sought by the IMF are neither uncalled for nor surprising, at least one does not reflect geo-political ground realities. Almost all governments are guilty of excessive expenditures, mostly because of lack of control or deliberate misuse of funds earmarked for (1) entertainment (2) travel (3) telephone calls (4) transport and fuel (5) medical and (6) personnel. Arguing how to control all this would be futile, let us simply “privatise” the concept of bureaucratic perquisites (“perks”). To provide transportation and fuel, the Government should select a standard economy car (Suzuki Alto, Khyber or Margalla or equipment depending upon the Grade) for the public servant and lease it out at 50% of the lease cost, the government bearing the balance, giving the public servant a fixed amount for a driver and fuel, on a sliding scale depending upon the city classification (whether expensive, average or low cost). Let the bureaucrat contribute to medical insurance from a government approved panel, the government paying for the insurance premium. As regards using government employees as household servants, this should be forbidden except in the case of few public residences such as the President’s, PM’s, Governor’s, Supreme and High Court Judge’s and Minister’s. For telephone calls, give the bureaucrat a fixed amount for local calls and have him justify each long distance call before reimbursement i.e. if it could not be done by E. Mail or courier, if it was that urgent. Elected representatives who become public servants (i.e. Ministers, Advisors etc should have a little variation as aforementioned e.g. their vehicle can come from a small staff pool — and no more than one vehicle, an economy model at that).