Sri Lanka Expo 2011 comes at an opportune time for Pakistan, when donors and friends alike are raising disturbing questions regarding resource mobilisation. Unfortunately, Islamabad seems to have realised ambitious budget targets are going to be embarrassing misses, and is weighing different options of communicating the failure in a way that does not erode too much dignity ahead of elections.
So instead of the promised PSE privatisation drive we’ve had an ideological shift. The people’s party suddenly finds reason to revisit its original left-leaning ethos, that restructuring should suffice in place of selling state assets altogether. Few expected ejection of political appointees so close to the election in the first place. And while PSEs continue to drain Rs400 billion annually, official fiscal space is expected to remain tight since there has been no visible effort to reorient the export basket. There will be little to be extracted from the otherwise disturbing collapse of the rupee. And little needs to be said regarding FBR reforms. It seems we will have to rely on foreign aid that much longer, since the government is already exhausting local borrowing opportunities to fund its non-development budget.
Therefore initiatives like the Sri Lanka Expo 2011 need to be taken seriously. To provide much needed fiscal elbow room, the government must go back to the basics of trimming losses and expanding earning. While improving trade, its best to build o and fine tune existing arrangements, before leveraging the improved profile to venture into uncharted capitals. So long as the government is without the political will to take painful but necessary steps like privatisation and FBR overhaul, it must at least build on export revenue. That way, it will draw some advantage yet from the rupee weakening environment. So far, though, there has been little of note in the ongoing fiscal year.