Re-inventing the wheel, again

Pakistan has not yet decided on how to finance the immediate financing gap which is huge and it is yet to decide how it wants to cope with its medium- and long-term financial needs in view of falling exports, burgeoning imports, shrinking remittances and escalating tax evasion.

Meanwhile, the new government has gone on a spree of setting up task forces for every socioeconomic problem — big and small — that it believes it needs to solve before embarking on the exercise of formulating a firm economic policy.

Indeed, the PTI-led coalition government seems to have set up more tasks forces in the first 10 days of its taking over the reins than did its predecessor in the comparable period. It is, certainly, reinventing the wheel at a faster pace than did the ousted PML-N government.

The Planning Commission (PC) of Pakistan has now become a huge graveyard of reports prepared by task forces set up by successive governments over the last 70 years. We have reports in the PC on every problem under the sun that this country has been facing since its birth.

The usual routine repeats itself without fail. While the task forces are busy compiling reports, the government of the day’s attention is hogged by day-to-day challenges. By the time the first year is over, the rut sets in leaving no time for taking even a cursory look at the completed reports of these task forces and these are then routinely buried in the PC’s graveyard.

Coming to here and now, we all know Pakistan needs $12 to $15 billion to bridge the immediate financial gap. Finance Minister Asad Umar has said that the government will meet part of this gap by paying the overseas Pakistanis higher returns than what they are getting now on their investments and that the government will conduct roadshows to present this to overseas Pakistanis.

This is exactly what the Chief Justice of Pakistan, Justice Saqib Nisar, intends doing while visiting Europe in October to meet the World Congress of Overseas Pakistanis on the invitation of Arif Anis, its Executive Director. The CJP is expected to be accompanied on this visit by the Wapda chairman and the State Bank governor. The ostensible purpose of the invitation is to help the CJP in his efforts to mobilise funds for the Bhasha and Mohamand Dams, which are estimated to cost $21 billion and with anticipated cost overruns, the final bill could be $25 billion. One is therefore looking at collecting a total of $40 billion, including $15 billion for meeting the immediate financial gap and a further $25 billion for dams.

Here is a considered suggestion: Let the CJP make a deal with Asad Umer for the government to pay 5% per year tax free for a five-year dollar bond and 6% per year tax free for a 10-year dollar bond, which should not be convertible to Pak rupees.

This is more than what the overseas Pakistanis can get on their present fixed investments, and less than what Pakistan pays in the open market. The bond denomination should be $10,000. In the past, it had been $100,000 — which restricts many overseas Pakistanis from investing.

Due to Pakistan’s image problem, and also because of the liquidity position of majority of the overseas Pakistanis, the scheme would not take off immediately. The CJP, therefore, will have to go and meet overseas Pakistanis wherever they are, for example Saudi Arabia, the UAE, the US and the UK. The US has a large group of rich Pakistani doctors, and their association has done a lot for Pakistan in the past. Let us also involve this association in CJP’s endeavours.

Also, the overseas Pakistanis must be removed from the FBR non-filers list since they are not Pakistani residents subject to filing Income Tax returns. This will free them to invest in Pakistan.

The present amnesty scheme should be extended to September 30, 2018, with the option for the declarers under amnesty to participate in the same US Dollar Bond Scheme as for overseas Pakistanis. The present amnesty five-year bond scheme with 3% profit per year, convertible to Pak rupees is not enough to attract investment.

Published in The Express Tribune, September 1^st, 2018.

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