In the absence of financing and with unchanged policies, our foreign exchange reserves will continue to deplete.
CHANTILLY, VA, US: This is with reference to Dr Pervez Tahir’s piece “The mouse that roared” (July 12). I am a bit confused with what Dr Tahir is trying to say. Obviously, a stronger, “reformist” budget would have kept the IMF at bay, at least for a while. That is self-evident. But that did not happen. Once I read the budget, like almost everyone else, I had this sinking feeling and knew we had messed up again.
We know the external current account deficit is very small but it has also been equally clear for some time now that we cannot finance even such a small deficit. In the absence of financing and with unchanged policies, our foreign exchange reserves will continue to deplete.
The prior actions “before a dime is disbursed” does not include reducing the deficit to 6.3 per cent (or six per cent) in 2013-14. That is a commitment. It is not even a “performance criterion” (except from the financing side). Actually, in the absence of a letter of intent that is in the public domain, we do not even know what the prior actions are. Those will include actions before a dime has been disbursed. That is why they are called “prior actions”.
The writer mentions “a serious challenge to provincial autonomy” and “donor disdain” for the NFC Award. It must be noted here that the provinces cannot be allowed to run amuck and do as they please.
I support fiscal devolution. But the fatal flaw in the NFC Award (as pointed out by better fiscal economists than I), is that there are no fiscal rules and no conditionalities that apply to the provinces in return for the billions they receive as part of the award. Since that is so, and unless it is changed and some strictures included, the NFC Award has thrown the hope of even a modicum of fiscal discipline in Pakistan out of the window.
The writer also mentions the “distressing” sale of public enterprises. I think he meant distress sale. There is nothing to suggest that this is the plan. Nawaz Sharif and his cronies are not going to have 25,000 job losses on their hands — even allowing for generous severance packages.
The writer’s comments on energy are well taken. Reducing the subsidy and doing nothing else is a bad idea even if 70 per cent of the subsidy accrues to the rich.
Meekal A Ahmed
Published in The Express Tribune, July 16th, 2013.
Like Opinion & Editorial on Facebook, follow @ETOpEd on Twitter to receive all updates on all our daily pieces.
