The last straw


The hapless people of Pakistan are facing the full brunt of the country’s perennial economic downturn. Prime Minister Gilani however wants more time and more money to fix the problem. Our traditional international donors, on the other hand are becoming increasingly impatient with the snail pace of our reforms, poor governance and lack of transparency at the state level.

At the recently concluded Pakistan Development Forum (PDF), Gilani said, The government believed in leading the people through painful yet fundamental reforms. He also appreciated the courage, determination and resilience of the people in the face of extreme adversity.

Shorn of verbosity, these are empty words, without any real resolve to change the profligate ways of the government. People should brace themselves for additional taxation in the form of general sales tax (GST), the inevitable rise in the tariff rates of electricity and fuel and the resultant inflation.

The donors attending the PDF were equally unimpressed. The British Secretary of State for International Development Andrew Mitchell put it succinctly at the conference by asking how his taxpayers money could be provided to Pakistan without the governments own attempts to help the flood victims, introduce reforms and curb corruption.

Only a few weeks back, the US Secretary of State Hillary Clinton echoed the same sentiments at a similar conference in Brussels. The U.S. Special representative Richard Holbrooke, perhaps to make his job easier in sorting out strategic issues with Islamabad, however feels (without any real evidence on the ground) that the government is now on the path to reforms by taxing the rich.

Incidentally, Pakistans tax to GDP ratio is barely 9 percent; whereas, in decent developing economies it should be twice as much. For example, Indias tax to GDP ratio is 15 percent. Apart from the fact the rich and the influential evade taxes, as a matter of norm there are vast sectors of the economy that are entirely exempt from taxation.

The feudals with their influential agriculturists lobby dominating the assemblies have successfully resisted any meaningful agriculture tax being imposed upon them. However, moves to increase the purchase price of their produce by the government have always been welcomed. In this context, resistance to the imposition of the GST not only by the PML(N) but the PPPs own coalition partners is indeed ironical.

Prime Minister Gilanis call for reforms at the PDF seems hollow, given that there have been no moves by his government or the provinces to improve governance, cut spending or to curb corruption. Most of the losses making public corporations continue to be headed by cronies and staffed by a bevy of jiyalas. Apart from bankrupting the exchequer, the manner in which the National Airline and the railways are being run is scandalous to say the least.

Despite the severe cash crunch, the government refuses to tighten its belt or to lead by example. The VIP culture is being justified in the name of security. Ever increasing motorcades of the prime minister, the chief ministers, ministers and other important functionaries of the state have become the norm rather than the exception. While the common man is a victim of terrorism and poor law and order, vast security detail is employed to protect the so-called VIPs at the expense of the citizen.

Our VIPs not only love to travel in style in bullet proof vehicles on the ground, most of them have their dedicated executive jets and helicopters provided to them at the expense of the taxpayer to fly them around. Each provincial chief minister has a different model of an executive jet. The prime minister and the president have an Airbus310 and two G-IV jets dedicated for their use.

According to an estimate the vast fleet of 26 VIP planes and helicopters is worth USD185 million. This does not include four executive jets recently purchased to carry the navy high command in style. Nor does it include their whopping maintenance and running costs. The Army Chief and the DG ISI also have their dedicated jets.

This unabashed luxury is gross even by the standards of the developed world where dedicated flying is done mostly on time sharing basis, strictly according to accountable and laid down procedure. These are austere times even for the west. The UK recently cut down its spending by ten percent while France has raised the retirement age to 62 simply to save money and increase efficiency.

Our leadership, while going around the world with a begging bowl, is obstinately refusing to change its ways. It refuses to acknowledge that the world is suffering from a donor fatigue and its current mantra is foreign trade rather than economic assistance.

Prime Minister Gilani has rightly paid tribute to the resilience of the Pakistani people. Facing three major disasters in the past five years they indeed have shown immense courage and fortitude in the face of extreme adversity. Apart from the State, our strong social support system has pulled the people through different crises. Unfortunately our political leadership has yet to rise to the occasion.

As one leading industrialist put it, while the country is going bankrupt big business is prospering. Thanks to the unprecedented increase in the international price of cotton the textile sector is doing rather well, despite part of the cotton crop being destroyed in the recent floods. Some of the leading banks of the country have declared record profits.

The local car industry has sold forty percent more cars than the previous year. Thanks to the increase in the international and government purchase price of agriculture produce there is a lot of surplus cash in the rural economy. At the expense of the urban poor and middle class, even the sugar industry is booming. Local markets and expensive restaurants are full of customers and despite expensive fuel there are ever increasing number of vehicles on the road.

Beneath this surface of ostensible prosperity, the yawning gap between the rich and the poor and middle classes is increasing. Will this be the proverbial last straw to break the camels back?

The writer is Editor, Pakistan Today.