Miles to go……
Pakistan’s economic worries are no hidden secret at all. The country’s new leadership had to raise money by selling the fleet of cars used by the former Prime Ministers besides some non usable choppers to raise around 400 million rupees.
These measures are part of a long list of other restrictive announcements on spending that the country plans to implement to set things on track. But all these measures are being seen as a mere beginning for the tough road ahead that lies for the leadership to take the country out of the mess it is entangled in.
The country’s economic worries are so deep rooted that an IMF team that is in Pakistan for consultations has expressed its reservations about the fiscal adjustment measures taken by the government in September.
Those measures were best encapsulated by what was referred to as a ‘supplementary budget’ and the finance bill introduced by the government to amend tax measures as well as revise expenditure targets.
The IMF team echoed the views of many independent voices that the measures announced by the government are altogether too inadequate to address the scale of the fiscal adjustment they are trying to undertake.
The team has pointed out that the announcements run contrary to the impression created by the country’s finance minister that the magnitude of the fiscal slippages are far larger than he imagined at first.
Notably, the supplementary budget was announced after weeks of internal consultation within the finance division and the government had been saying all along that it would take up to the end of the month of September to come up with a realistic plan to address the twin deficits that plague the economy.
The amount of time that went into drawing it up raised expectations that something big and bold was on the way. Instead, what came to the forefront were marginal adjustments and a nervous revenue plan that relies on stricter enforcement actions.
The country has almost curtailed its loan raising plans saying that the loans raised through various financial agencies cannot bail out the country as the pay back plans did not suit them at this juncture. Besides various curtailments especially in railways were shelved that could have been beneficial for the country in the long run.
Pakistan’s most of the institutions or government owned companies and enterprise is squeezing it of all the little resources it has. The leadership has not opened its eyes to privatisation and stressed an action plan on what to do with state-owned enterprises and their mounting losses and inefficiencies.
The economic reforms process that was initiated in India in the early 2000 needs to be implemented so that the government owned enterprise will start crawling at least for the time being, on its own.
It is high time that the government’s finance team began delivering on an action plan and giving the country some economic direction. Weak steps that are quickly backtracked on do not count as setting the right direction for the economy. The government needs to embark on its macroeconomic adjustment journey immediately.
For Pakistan the challenges are manifold. One the one hand it has to face hostile neighbours and on the internal front too the country is plagued with serious challenges that are telling upon the very existence of the country. The leadership has to act fast and meticulously to meet the challenge.