Sheikh seeks national consensus to decide their fate

The government has announced that it will not pump taxpayer money into loss-making public sector enterprises.

The government has announced in categorical terms that it will not pump taxpayer money into loss-making public sector enterprises (PSEs), calling for a “national consensus” to decide their future.

Winding up the debate on the federal budget for fiscal year 2010-11 in the National Assembly on Tuesday evening, Finance Minister Dr Abdul Hafeez Sheikh proposed the formation of a parliamentary committee to look into what the government could do with these organisations.

“We have to make tough decisions. Let’s make a parliamentary committee, a group to see how we can handle them,” Dr Sheikh spoke of around two dozen public sector organisations which eat up more than Rs250 billion out of budgetary allocations every year.

“Nobody will get the money of Pakistani people easily (any more),” Dr Sheikh said in what sounded to be a policy speech.

The minister said these enterprises have taken the country’s economy hostage and added that the government could not base all its budgetary targets on their performance.

Though he refrained from clearly announcing whether privatisation is one of the options, the minister hinted at limiting the government’s role in running businesses.

“We cannot sacrifice the whole economy for a few institutions…we will have to redefine the government’s economic role,” the minister said in what some analysts interpret as an early sign of a massive privatisation drive in months to come.

Dr Sheikh urged lawmakers to support the government to take a decision for the future of these institutions, including the Pakistan International Airlines (PIA) and Pakistan Steel Mills (PSM).

“If you are in favour of Pakistan, then you come forward,” the minister said addressing the lawmakers. “We will have to come out with a conclusion or a judgment in the government’s (economic) role.”

“We have to be careful about that…we will have to allow growth not through the government but through the private sector. And the role of the government will be that of a facilitator,” Dr Sheikh said, highlighting what could be a prominent feature of his economic policies.

The minister also promised a massive reform in the tax collection mechanism and said he would welcome if there is a parliamentary oversight of the process the government plans to undertake.

Defending an official initiative of consolidating the country’s sales tax system, Dr Sheikh termed uncalled for fears that the new arrangement would trigger a fresh wave of price hikes.

Dr Sheikh said the recovery in Pakistan’s economy is still fragile and it “can die prematurely if not handled properly.”

The minister said that the agriculture sector that contributes most to the country’s economy had been devolved to the provinces under the new constitutional arrangement.

He asked those urging the centre to tax the sector must “use their motivational powers” to convince provincial governments do it.

Dr Sheikh also advocated the provinces’ right to collect general sales tax (GST) on services under the latest National Finance Commission (NFC) award and promised the federal government would never interfere in it.

Dr Sheikh criticised those cabinet ministers who reportedly have half a dozen official vehicles and expressed his inability to control them.

However, he made a remark that would morally hurt the ministers having fun on the taxpayers’ money. “If they don’t feel ashamed, what can I do… They must feel ashamed,” the minister said to the cheers of legislators from both the treasury and opposition.

Published in The Express Tribune, June 23^rd, 2010.