More than words, please

Nawaz govt doesn't appear to have stomach to crack down on tax evasion without which, closing budget gap is impossible

When Finance Minister Ishaq Dar complains about the legacy he is faced with, we will concede that he has a point. Having said that, this is no excuse for not outlining a clear plan for the way forward. In a recent cabinet meeting, the minister clarified some macroeconomic statistics and stated several ambitious goals about where he would like to see the nation’s debt level, the inflation rate, foreign currency reserves and the economic growth rate. But he failed to outline exactly how he plans on achieving these.

How, for example, does the minister plan on halving the budget deficit without undertaking any major initiatives on taxation? The minister cryptically hinted that he would unveil a plan “if the situation did not improve”, but provided no details to his cabinet colleagues. We have news for the minister: tax collection in Pakistan is about as bad as it has ever been. If he has a plan to fix the problem, now would be the time to let the nation in on the secret. And the minister’s comments about the data collected by the National Database and Registration Authority on tax evaders is feeding some of our worst fears about the Nawaz Administration: they do not appear to have the stomach to crack down on tax evasion without which, closing the budget hole is impossible. Simply put, there is far less room to close the budget gap by cutting expenses than there is by raising revenue.

And the minister’s criticism of the media in reporting higher inflation seems to be based on unsound economics: yes, the prices of some commodities have gone down, but consumers buy many commodities. Reporting on what is happening with the Consumer Price Index is far more valid than reporting on just a few commodities. It takes a lot more than intentions and words to turn around an economy. It takes a carefully crafted strategy, followed by concerted action. We have seen precious little of that from the minister so far.

Published in The Express Tribune, January 4^th, 2014.

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