He has the full picture on what’s happening or, more aptly, what should be and is not happening. Everybody wants money and he is supposed to perform some kind of miracle even as no one is prepared to do what he and his team proposes. It is easy to criticise him because whatever solution he gives requires taking punishment. And punishment we don’t want, despite decades of poor economic sense, bad planning and an ill-conceived list of priorities.
Let me also say upfront that I have never met Hafeez Shaikh, though I have long known Nadeem Ul Haque, one reason I know the quirky way in which he spells his name. So I asked Nadeem, he being deputy chairman planning commission, of what he thinks of the situation and where we are headed. Nadeem’s answer: the situation is bad, there is no money, and if you are looking for an engineering solution, despair thyself. That’s what Macduff had said to Macbeth before he killed the latter.
Last year, mid-December, the economic team told the prime minister that the gap between income and expenditure was fast widening. The briefing focused on the “consequences of delaying power sector reforms, the fallout of the non-implementation of General Sales Tax (GST) and the Pakistan Army’s request for additional funds”.
Power sector reforms and the GST, renamed the RGST, are in limbo because the government has failed to get even its coalition partners on board. The hike in petrol prices, recommended by the Oil and Gas Regulatory Authority, has been taken back after the Opposition raised Cain (of course without giving a solution). And now the government has adopted the economic reforms agenda put forward by the PML-N. It remains to be seen through what magic the government will make these two mutually exclusive agendas complement each other.
Meanwhile, the United States, though less vociferous now, still wants the Pakistan Army to go into North Waziristan. That means more money for the army. Can the finance ministry generate funds for that campaign? It can’t, and has said so. So, what can be done? Firstly, it should be understood that the military budget, presented as part of the national budget, is about maintaining a military. It is the minimum required to maintain a military as it stands. It is not operational budget. Operational or war budgets are separately approved. And we are fighting a war which is everywhere, in the operational areas as well as in the cities, and the cost is increasing.
Secondly, even without going into North Waziristan, which will have its own cost, this war is becoming expensive. There is visible expenditure of increased security requirements, degradation of stocks and equipment, loss of men, officers and jawans, and there are invisible costs like exchange rate fluctuations etc. For the military, as the finance ministry also knows, there are issues of concern, the most important being that the military’s war-fighting potential is not degraded. The economy, thus, has become a major concern for the military. Economists are agreed, despite Chaudhry Nisar Ali Khan’s politically-motivated fulminations, that the country needs structural reforms which are tougher to undertake when there is shrinking fiscal space but are needed more urgently precisely at that point.
Therefore, at this time of national crisis, let the military take a good, hard look at itself and see where and how it can save money from existing resources. US Defence Secretary Robert Gates is deeply invested in putting a cap on the US military’s interest in toys to fight the wars of 2015 and 2020 and diverting resources to fight the current war. We can’t expect our defence minister to do any such thing but it is important for the military itself, given its concern about the economy, to see if it is spending on a potential war based on perceived rather than actual threats.
If it is, it should immediately put a cap on such projects. It may not save much but whatever it can is welcome and will help the military as well as the nation.
Published in The Express Tribune, January 17th, 2011.
COMMENTS (16)
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ