Ex­cel­lent pri­or­i­ties for Bud­get 2016-17. Now we need 'car­ing' gov­er­nance

The Pak Banker - - FRONT PAGE - Rahim Sheikh

LAST week the Fi­nance Min­is­ter, Mr. Ishaq Dar, sat down with his bu­reau­cratic team at the Min­istry of Fi­nance in Is­lam­abad to chair the first meet­ing to plan the shape of the Bud­get for the Year 2016-17. Which pos­si­ble way will this PML(N) govern­ment steer the econ­omy in or­der to be pre­pared for the next elec­tions due in 2018.

All 'demo­cratic' gov­ern­ments play pol­i­tics with the econ­omy, and to imag­ine that any eco­nomic pol­icy is di­vorced from political re­al­i­ties is to be naïve be­yond imag­i­na­tion. In this piece let me dwell on what we see on the sur­face, how does it match what other sim­i­lar economies are do­ing, what are the pro­fessed ar­eas of pri­or­ity, and, lastly, what would the ideal pri­or­ity ar­eas in which fu­ture Bud­gets should be planned. It is a tall or­der so many things in a lim­ited space, but we can skim the sur­face and in fu­ture pieces dwell in de­tail on all th­ese mat­ters. On the sur­face and the Press Re­lease is­sued by the Min­istry of Fi­nance, the pri­or­ity ar­eas are go­ing to be (1) en­ergy pro­duc­tion, mean­ing re­li­able and un­ham­pered elec­tric­ity and gas sup­ply to in­dus­try and the peo­ple, (2) the se­cu­rity sit­u­a­tion, mean­ing that the law and or­der sit­u­a­tion be got un­der con­trol over 100 per cent of the land, sea and air of Pak­istan, (3) the re­turn of all Afghan refugees to their home­land, in­clud­ing their chil­dren born in Pak­istan, (4) con­tin­u­ing of in­fras­truc­tural projects in­clud­ing pro­vid­ing crit­i­cal and es­sen­tial pub­lic trans­porta­tion sys­tems at af­ford­able rates in the ma­jor cities, and, lastly, (5) to pro­vide fis­cal and mon­e­tary space to man­u­fac­tur­ers within Pak­istan. Our news­pa­per, the daily 'The Pak Banker' has been the first to be able to pro­vide read­ers, es­pe­cially bankers, with th­ese fu­ture pri­or­i­ties as spelled out just three days ago in a closed meet­ing. As a first com­ment on the pri­or­ity ar­eas it must be said that all of them surely sen­si­ble, and un­avoid­able, pri­or­ity ar­eas. We would have been happy if the agri­cul­tural sec­tor had also been given more pri­or­ity. We say this for a rea­son, and that be­ing that if we ex­pect cot­ton­re­lated tex­tile in­dus­try, the leather in­dus­try, or most im­por­tantly the food pro­vid­ing sec­tors to pro­vide prod­ucts at rea­son­able rates, to tackle the prob­lems of agri­cul­ture are crit­i­cal. If we fail in them then all other pri­or­i­ties are not worth the pa­per they are writ­ten on.

The pro­duc­tion of cheap and re­li­able en­ergy is an un­avoid­able pri­or­ity that, let us con­fess, Pak­istan has badly failed in. Our in­abil­ity to build dams in time is the main rea­son for this sit­u­a­tion. But then let us also con­fess that pri­vate sec­tor in­vestors in en­ergy projects have been un­re­li­able to say the least. Pak­istan is now want­ing to dab­ble with coal-fired en­ergy gen­er­a­tion. This surely will end in disas­ter, with the ar­gu­ment that it has worked in In­dia and China not be­ing a sound enough rea­son given the ter­ri­ble con­di­tion of their en­vi­ron­ment. Prob­a­bly, the time has come to re­think the en­tire pri­va­ti­za­tion of the en­ergy sec­tor. Maybe, had it been left to WAPDA to come up with timely power gen­er­a­tion projects, given their im­mense ex­per­tise, and with a cen­tral­ized man­age­ment, this would have worked out bet­ter. But even al­low­ing for pri­vate sec­tor in­dul­gence, there is a need for a se­ri­ous de­bate on this is­sue.

On the in­ter­nal se­cu­rity it goes with­out me say­ing that our very sur­vival de­pends, as a na­tion­State, on get­ting rid of the threat of ter­ror­ists. There is surely a need to play down the in­ter­nal religious dif­fer­ences, and to con­trol di­vi­sive com­mu­nal ac­tiv­i­ties, es­pe­cially on the ex­pand­ing so­cial me­dia. An at­tempt has to be made to in­volve com­mon cit­i­zens to keep the se­cu­rity forces in­formed of any ac­tiv­ity re­lated to ter­ror­ism in their area. Only when the peo­ple sup­port the se­cu­rity forces will this men­ace be over­come. Al­ready we see our rulers mak­ing 'lib­eral' com­ments, which is a good sign.

The re­turn of over three mil­lion Afghan refugees, not to speak of an equally larger num­ber of chil­dren born in Pak­istan, means that we are talk­ing about al­most ten mil­lion per­sons. Given that Pak­istan's pop­u­la­tion is 200 mil­lion, it is like shift­ing al­most five per cent of the pop­u­la­tion back to a coun­try than cer­tainly is not pre­pared, eco­nom­i­cally, to ac­cept them back. The price of sup­port­ing the for­eign pol­icy ob­jec­tives of alien forces might well see the un­rav­el­ling of our own very dear State. This ef­fort will need a lot of money, a lot of work, and a peace­ful en­vi­ron­ment with Afghanistan, which egged on by a hos­tile In­dia, is mak­ing a so­lu­tion im­pos­si­ble. This is a laud­able and un­de­ni­able pri­or­ity area.

The con­tin­ual of ma­jor in­fras­truc­tural work, es­pe­cially the pro­vid­ing of crit­i­cal pub­lic trans­porta­tion, is crit­i­cal if we are to live in a mod­ern State. The wrath of those in­ter­ested in sav­ing our her­itage from dam­age has not been hon­estly han­dled. The mere fact that UNESCO is also wor­ried means there is some­thing wrong. Is it be­com­ing a case of bad gov­er­nance, this I leave to the reader? Or is it a case of the to­tal ab­sence of an al­ter­na­tive that sees a sit­u­a­tion of a pro­ject be­ing bull-dozed on a city and its peo­ple? Lastly we have the govern­ment not al­low­ing man­u­fac­tur­ers with enough fis­cal and mon­e­tary space to de­velop their projects. We know, and it has been an­nounced by Mr. Dar him­self, that in the cur­rent fi­nan­cial quar­ter the govern­ment will raise yet an­other 1.74 tril­lion ru­pees of 'govern­ment in­vest­ment bonds' for banks to pick up. The auc­tions have come up with twice the sought amount. This just shows that there is an emer­gency need for 'Mon­e­tary Re­spon­si­bil­ity' on the part of the banks. Just how can any coun­try con­tinue to ex­ist if all the money de­posited in banks is handed over to a govern­ment which is spend­ing left, right and cen­tre on in­fras­truc­tural and trans­port works?

It goes with­out say­ing that th­ese are ba­si­cally elec­tion-win­ning projects too. Is the el­e­ment of cor­rup­tion present? To deny is use­less be­cause no one in Pak­istan will be­lieve any such as­ser­tion. To claim that it is Chi­nese loan, and hence clean, is also not an hon­est an­swer. Surely the next step will be for the peo­ple of Pak­istan to blame all ills on the Chi­nese. Can Pak­istan af­ford this sit­u­a­tion just as we all blame the USA for all our ills?

But the point is that there is an ur­gent need for the State Bank of Pak­istan to en­force a law whereby all com­mer­cial banks should not pro­vide the govern­ment with money, in any form, over a 50 per cent limit. Let the pri­vate sec­tor, and hence the peo­ple, also pros­per. This is the law in many coun­tries, and is meant to safe­guard banks. Have we for­got­ten the lessons of the 2008 Re­ces­sion? Let it be said that the pri­or­i­ties of the govern­ment are ab­so­lutely spot on. What is wrong is the man­ner in which so­lu­tions are be­ing en­forced. Mind you, this is the dif­fer­ence be­tween good and bad gov­er­nance. Pak­istan has al­ready ex­pe­ri­enced a 'no gov­er­nance' govern­ment of the PPP. The coun­try can­not af­ford gov­er­nance go­ing up the wrong track. That is where lead­er­ship comes in. We hope and sin­cerely wish to see more of it, one di­vorced from ex­trem­ist so­lu­tions.

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