Pakistan’s top corporates – national and multinational – have expressed a profound sense of anguish and dismay over present economic drift with a hope that the dialogue between political parties would lead to crystallise into a greater consensus on a national economic agenda.The three key recommendations of Pakistan Business Council (PBC) are: (a) Deal with energy crisis on a war-footing; (b) Reduce public finance deficits; and (c) Increase expenditure on vital social sectors; ie education and health with special focus on targeted subsidies for the most vulnerable segments of society.PBC’s advice appears to be in conformity with this newspaper’s own editorial policy in relation to the situation. It also appears to be in line with the economic agenda spelt out by Finance Minister Dr Hafeez Sheikh in his Budget speech last June. Likewise, it overlaps, to a great extent, Nawaz Sharif’s 10-point agenda. If both political parties are on the same page then what is holding back forward movement on the economic agenda? The press briefing by Senator Dar and FM Sheikh indicates that political and partisan interests have taken a clear precedence over sound economic goals.
Both the major political parties appear to be wrestling with an eye on the next elections. PPP would like to complete its five-year term and bank upon rural Pakistan for mass support on the back of windfall earnings from high crop prices, with no additional levy of taxation other than RGST and other commitments made to the International Monetary Fund. While PML (N) wants early elections under an independent and powerful election commission to dilute the ability of the establishment to manoeuvre the polls to their liking. The icing on the cake PML (N) seeks – is an effective accountability law under which a non-political National Accountability Bureau could perform its task independently without fear and favour.Senator Dar’s emphasis on obtaining a laundry list of non-performing loans of political figures from 1972 – now restricted to a significantly lesser number – gives birth to an important question: how will a loan recovery campaign reduce the public finance deficits? PML (N) team appears to be more hostile towards the PML (Q) leadership. Its hostility or animosity is perhaps based on a perception (which may be true to some extent) of enticement by General Pervez Musharraf through bank loan write-offs or inquiry threats to ascertain whether or not the Shujaat-led party’s bigwigs had received financial favours in the sale of big three banks – HBL, UBL and ABL – that took place under the last PML (Q) government.
The area covering the talks between the largest parties is not for prioritising the agenda to tackle a fast-deteriorating economy; it’s rather an attempt to buy more and more time. PPP is hoping to keep its allies – MQM and ANP – within the coalition fold and overtly seeking to net PML (Q) as well on account of the growing gulf between the Sharifs and the Chaudhrys.PML (N) has already thrown the challenge of removing PPP from Punjab coalition when 45 days deadline ends with a view to forcing an early election. Nawaz Sharif feels that he can be in the driving seat to create an urban uprising on the frustration of the people suffering from rising cost of living, facing sliding civic services and utility shortages amid growing unemployment. PPP, alone, is to blame for allowing itself to be cornered. Its technocrat finance guru Dr Hafeez Sheikh’s agenda for economic reforms is no different from the three PBC recommendations. Unfortunately, however, the choices given by Dr Sheikh to achieve these goals were not palatable to the top PPP leadership. Pakistan’s Western friends and multi-lateral agencies are losing patience with our political leadership. They rightly see a run-away train hurtling towards a wreck if not urgently checked. Business community will soon lose patience as well. Thus far, seven rounds of talks between the government and PML (N) have failed to transform into a strong political will to undertake fresh revenue measures and do away with the policy of increasing the subsidy on account of a freeze on POL retail prices.
The latest offer of President Zardari to hold a roundtable on economy is an attempt to raise the level of talks to party chiefs’ level and save the ongoing dialogue from derailing. Chances of Nawaz Sharif and Asif Zardari to directly hold a dialogue in good faith with renewed confidence in each other are not very bright. The possibility of further isolating PML (N) by bringing PML (Q) into the existing coalition fold of PPP, MQM and ANP may be a notch higher.The resignation of federal cabinet to allow Prime Minister Gilani to set up a new, smaller cabinet and reduce government expenditure will hardly be of any significance as Defence and Debt Servicing alone constitute over 70 percent of the entire expenditure. The need of this hour is introduction of revenue-enhancement measures through comprehensive tax reforms, including the imposition of RGST – a key IMF condition for continued financial aid from the Fund to protect forex reserves from evaporating – Brecorder
