We have no experience with sustained high inflation and we have no social protection for the poor and vulnerable.
MCLEAN, VA, US: This is with reference to the article “How much more can we take?” by Ahmer Ashraf (October 7). We have no experience with sustained high inflation in Pakistan and we have no social protection for the poor and vulnerable. The Baitul Maal, zakat, ushr and the Benazir Income Support Programme are all meant to be social nets in practice but they need to be audited to find out who is benefitting and who is being overlooked.
The government, specifically the ministry of finance, has breached its borrowing limits again violating another performance criterion of the GOP-IMF programme. This happens because the Federal Board of Revenue cannot raise enough revenue and because the government cannot control its spending.
They will come up with all kinds of excuses and request a waiver for non-compliance and the fund staff will take it to the IMF Executive Board; and the Board, with reservations, will approve it. And then we will breach the next end-quarter zero net borrowing target. Such injections of “high-powered” money from the central bank have a powerful effect on pushing inflation to new heights.
The solution is to get back to basics: get your deficit under control, raise revenue and cut spending. It is very simple implement if there is the political will to do it.
Meekal Ahmed
Published in The Express Tribune October 8th, 2010.
