Double jeopardy!
Difficult days are ahead and the growing economic predicament will not end by mere rhetoric and blame game
FILE PHOTO: A woman rides on a motor bike as she wears a protective face mask amid the rush of people outside a market as the outbreak of the coronavirus disease (COVID-19) continues, in Karachi, Pakistan June 8, 2020. REUTERS
Could one expect something better for the people of Pakistan in the national budget from those who represent elite interests and foreign allegiances? Living in their comfort zones unaffected from the plight of the common people due to Covid-19, they prevail over the so-called members of parliament by arguing that IMF and other lenders will cease their financial bailout packages if state-owned enterprises are not privatised, salaries and pensions not frozen, and subsidies given to the poor in daily essential items are not drastically reduced.
While the Rs3,194 trillion budget deficit reflected in the 2020-21 Budget is 7% of GDP, 220 million Pakistanis will face a double jeopardy because of the pandemic and its economic fallout, including large-scale unemployment. For the first time in recent history there is no increase in the salaries and pensions, and debt servicing of Rs2.9 trillion along with defence expenditures of Rs1.2 trillion surpassed last year’s non-development expenditures of both.
The economic growth rate of 5.6% during the last PML-N government shrank into the negative zone in the outgoing fiscal year. As much as Rs2.8 trillion will be transferred to provinces from Islamabad under the National Finance Commission (NFC) and Rs650 billion federal development programmes will be launched, but the cash-starved HEC will be given Rs93 billion for development and non-development expenditures. Meanwhile, provinces will present their own budgets and by June 30, both federal and provincial budgets should be approved by the respective assemblies.
The pandemic worsened the economic crisis because Rs700 billion were lost in tax collection; Rs1.5 trillion provided by the federal government to those affected from the coronavirus; and falling exports and remittances. On the flip side of Pakistan’s economy is the contraction of trade deficit of $3 billion which in 2018 was $20 billion and sharp decline in current account deficit. International donors are also expected to give relief to Pakistan for debt repayment during FY20-21. Yet, Pakistan will have to borrow around $12 billion from international donors to just pay interest on its debt of around $85 billion and to meet the budget deficit. While thousands have been unemployed because of Covid-19 and prices of essential items like wheat and sugar have risen, more than Rs1 trillion have been spent to cover the losses of PSM, PIA, railways and other state-owned enterprises, whereas after the18th Amendment the federal government’s resources have declined because 57% of its income is now transferred to provinces.
Regardless of the statistics, one can figure three realities which will shape Pakistan’s economic and political landscape in the coming years. First, Pakistan will have to grapple with the issue of sovereignty because it’s heavily influenced by the IMF and the FATF. IMF’s interference in Pakistan’s budget-making process is so obvious that it has succeeded in preventing increases in the salary and pension of federal government employees and has suggested that Islamabad change its retirement age to 65 years and slash its pension bill of Rs500 billion, which has surpassed salary expenditures.
Muted voices were raised in the federal cabinet meeting held last week against this but their concerns were ruled out because the non-elected high-ups of the present regime made it clear that the IMF will not approve any rise in salary and pension. Why is this global lender so influential and why has the country’s sovereignty been mortgaged to this American-dominated fund? If the IMF has granted a bailout package to salvage Pakistan from an economic collapse, it considers its right to interfere in the country’s sovereign rights. The IMF is also forcing the federal government to privatise PSM, PIA, railways and other state-run organisations. It also advises the government to increase electricity and gas prices and reduce subsidies on items like the metro bus.
Along with the IMF; the World Bank, ADB, FATF and donor countries like China, Saudi Arabia and the UAE also influence Pakistan to toe their line. When a country is financially dependent, it is also politically subservient to those who provide loans and arrange bailout packages. As a result, Pakistan’s sovereignty and resources have been mortgaged and the country is unable to withstand foreign pressures because of its economic dependence.
Second, those supposed to take care of Pakistan’s economic and security interests are without any stake in this country because most hold dual nationalities. Is it not a security risk to depend on the so-called advisers appointed by the PTI government given their loyalty may not be with Pakistan but with other countries with whom they have taken the oath of allegiance? Those holding positions of power and foreign passports can never be dedicated to the country and will ditch at the time of grave crisis. When Moeen Qureshi was appointed as caretaker prime minister in July 1993 after the fall of the Nawaz Sharif government, he was holding American nationality. When Shaukat Aziz was called from the World Bank during the initial days of General Musharraf as chief executive, he was also holding a foreign passport. Many key advisers and government officials hold dual nationalities which rightly questions their integrity and loyalty for Pakistan.
Even those with foreign qualifications and passports are unable to make any difference in terms of performance. Pakistan’s image as a rental state is a reality because it has compromised its sovereignty and national interests. How loyal was Shaukat Aziz with his country? The day his term as prime minister was over, he went back to the UK. There is no dearth of such people who, because of Pakistan’s elite culture, impose themselves on the policymaking apparatus and when their interests are served, they return to their country of true allegiance.
Third, the political, military, bureaucratic, business and feudal elites are equally responsible for making the lives of Pakistanis miserable because they instead of protecting the people’s interests, are more inclined to salvage their own privileges.
Ironically, there is an unwritten agreement between the treasury and opposition benches in the National Assembly, the Senate and provincial assemblies to support bills which increase their monthly salaries and privileges but are mum in giving relief to the common person. The federal and provincial budgets will be approved despite the lukewarm opposition because they are unable to take a stand on issues that threaten the very survival of the people. The members of parliament are more interested in their privileges like free air tickets for their family members and are not to be seen in their constituencies to provide relief to voters during the pandemic.
Difficult days are ahead and the growing economic predicament will not end by mere rhetoric and blame game, but by agreeing to a plan to protect the interests of people instead of governing elites. The focus of all the stakeholders of Pakistan should be on how to deal with the double jeopardy which has put the country’s survival at stake.
Published in The Express Tribune, June 19th, 2020.
While the Rs3,194 trillion budget deficit reflected in the 2020-21 Budget is 7% of GDP, 220 million Pakistanis will face a double jeopardy because of the pandemic and its economic fallout, including large-scale unemployment. For the first time in recent history there is no increase in the salaries and pensions, and debt servicing of Rs2.9 trillion along with defence expenditures of Rs1.2 trillion surpassed last year’s non-development expenditures of both.
The economic growth rate of 5.6% during the last PML-N government shrank into the negative zone in the outgoing fiscal year. As much as Rs2.8 trillion will be transferred to provinces from Islamabad under the National Finance Commission (NFC) and Rs650 billion federal development programmes will be launched, but the cash-starved HEC will be given Rs93 billion for development and non-development expenditures. Meanwhile, provinces will present their own budgets and by June 30, both federal and provincial budgets should be approved by the respective assemblies.
The pandemic worsened the economic crisis because Rs700 billion were lost in tax collection; Rs1.5 trillion provided by the federal government to those affected from the coronavirus; and falling exports and remittances. On the flip side of Pakistan’s economy is the contraction of trade deficit of $3 billion which in 2018 was $20 billion and sharp decline in current account deficit. International donors are also expected to give relief to Pakistan for debt repayment during FY20-21. Yet, Pakistan will have to borrow around $12 billion from international donors to just pay interest on its debt of around $85 billion and to meet the budget deficit. While thousands have been unemployed because of Covid-19 and prices of essential items like wheat and sugar have risen, more than Rs1 trillion have been spent to cover the losses of PSM, PIA, railways and other state-owned enterprises, whereas after the18th Amendment the federal government’s resources have declined because 57% of its income is now transferred to provinces.
Regardless of the statistics, one can figure three realities which will shape Pakistan’s economic and political landscape in the coming years. First, Pakistan will have to grapple with the issue of sovereignty because it’s heavily influenced by the IMF and the FATF. IMF’s interference in Pakistan’s budget-making process is so obvious that it has succeeded in preventing increases in the salary and pension of federal government employees and has suggested that Islamabad change its retirement age to 65 years and slash its pension bill of Rs500 billion, which has surpassed salary expenditures.
Muted voices were raised in the federal cabinet meeting held last week against this but their concerns were ruled out because the non-elected high-ups of the present regime made it clear that the IMF will not approve any rise in salary and pension. Why is this global lender so influential and why has the country’s sovereignty been mortgaged to this American-dominated fund? If the IMF has granted a bailout package to salvage Pakistan from an economic collapse, it considers its right to interfere in the country’s sovereign rights. The IMF is also forcing the federal government to privatise PSM, PIA, railways and other state-run organisations. It also advises the government to increase electricity and gas prices and reduce subsidies on items like the metro bus.
Along with the IMF; the World Bank, ADB, FATF and donor countries like China, Saudi Arabia and the UAE also influence Pakistan to toe their line. When a country is financially dependent, it is also politically subservient to those who provide loans and arrange bailout packages. As a result, Pakistan’s sovereignty and resources have been mortgaged and the country is unable to withstand foreign pressures because of its economic dependence.
Second, those supposed to take care of Pakistan’s economic and security interests are without any stake in this country because most hold dual nationalities. Is it not a security risk to depend on the so-called advisers appointed by the PTI government given their loyalty may not be with Pakistan but with other countries with whom they have taken the oath of allegiance? Those holding positions of power and foreign passports can never be dedicated to the country and will ditch at the time of grave crisis. When Moeen Qureshi was appointed as caretaker prime minister in July 1993 after the fall of the Nawaz Sharif government, he was holding American nationality. When Shaukat Aziz was called from the World Bank during the initial days of General Musharraf as chief executive, he was also holding a foreign passport. Many key advisers and government officials hold dual nationalities which rightly questions their integrity and loyalty for Pakistan.
Even those with foreign qualifications and passports are unable to make any difference in terms of performance. Pakistan’s image as a rental state is a reality because it has compromised its sovereignty and national interests. How loyal was Shaukat Aziz with his country? The day his term as prime minister was over, he went back to the UK. There is no dearth of such people who, because of Pakistan’s elite culture, impose themselves on the policymaking apparatus and when their interests are served, they return to their country of true allegiance.
Third, the political, military, bureaucratic, business and feudal elites are equally responsible for making the lives of Pakistanis miserable because they instead of protecting the people’s interests, are more inclined to salvage their own privileges.
Ironically, there is an unwritten agreement between the treasury and opposition benches in the National Assembly, the Senate and provincial assemblies to support bills which increase their monthly salaries and privileges but are mum in giving relief to the common person. The federal and provincial budgets will be approved despite the lukewarm opposition because they are unable to take a stand on issues that threaten the very survival of the people. The members of parliament are more interested in their privileges like free air tickets for their family members and are not to be seen in their constituencies to provide relief to voters during the pandemic.
Difficult days are ahead and the growing economic predicament will not end by mere rhetoric and blame game, but by agreeing to a plan to protect the interests of people instead of governing elites. The focus of all the stakeholders of Pakistan should be on how to deal with the double jeopardy which has put the country’s survival at stake.
Published in The Express Tribune, June 19th, 2020.