The flight of capital
In the financial year 2016-17, the considerable sum of $15.253 billion was transferred out of the country
That the country is in a precarious position financially is undeniable, and the interim government has the unenviable task of keeping matters fiscal more-or-less in balance until the elections are over. Having recently commented in these columns on the deviousness of politicians when it comes to declarations of assets, it must equally be noted that those who are wealthy outside the political sphere are doing their homeland no favour either. In the financial year 2016-17, the considerable sum of $15.253 billion was transferred out of the country via regular banking channels, as well as the less regular Hundi and Hawala systems.
This came to light with the release of an eight-page written order in a suo-motu case which related to the retrieval of allegedly ill-gotten money from foreign accounts. A panel of 12 financial experts was convened to gain an insight into the process of accumulation of undeclared foreign assets held by Pakistan citizens and what, if anything, could be done in terms of executive and legislative measures to trace and retrieve these assets. It does not take a PhD in economics to understand that such an outflow is going to have an impact on the national foreign exchange reserves as well as having a negative effect on the Pakistani rupee. The money that has ‘escaped’ did so without paying tax before it disappeared. The Honourable Justices on reading the report commented to the effect that they were ‘not expert in economic, fiscal or financial matters’ but they do have concerns about the seemingly unfettered flight of capital at a time when this — or any — government needs to be holding its forex close to its chest.
As they readily admit the courts are not the place to formulate economic policy, but they are right to raise an alarm at what at best is lax management and at worst a connivance between the government and the wealthiest citizens of the state to the benefit of one group and to the detriment of another — the majority. Nothing can be done immediately but this has to be added to the growing ‘to do’ list of the incoming government.
Published in The Express Tribune, June 24th, 2018.
This came to light with the release of an eight-page written order in a suo-motu case which related to the retrieval of allegedly ill-gotten money from foreign accounts. A panel of 12 financial experts was convened to gain an insight into the process of accumulation of undeclared foreign assets held by Pakistan citizens and what, if anything, could be done in terms of executive and legislative measures to trace and retrieve these assets. It does not take a PhD in economics to understand that such an outflow is going to have an impact on the national foreign exchange reserves as well as having a negative effect on the Pakistani rupee. The money that has ‘escaped’ did so without paying tax before it disappeared. The Honourable Justices on reading the report commented to the effect that they were ‘not expert in economic, fiscal or financial matters’ but they do have concerns about the seemingly unfettered flight of capital at a time when this — or any — government needs to be holding its forex close to its chest.
As they readily admit the courts are not the place to formulate economic policy, but they are right to raise an alarm at what at best is lax management and at worst a connivance between the government and the wealthiest citizens of the state to the benefit of one group and to the detriment of another — the majority. Nothing can be done immediately but this has to be added to the growing ‘to do’ list of the incoming government.
Published in The Express Tribune, June 24th, 2018.