Who is to blame and who is to suffer?
The Pakistani rupee (PKR) has, as of Monday, crossed the psychological barrier of Rs 100 in exchange for a dollar. This high exchange rate was inevitable because of peculiar circumstances prevailing in the country due to political upheavals, constitutional cases, strikes, sit-ins, power shortage and whatnot. But most of it all, and ironically too, it was because Islamabad had to pay back something it had loaned to improve its economy. It paid back an installment of $145.791 million of a loan it took from the IMF and another of $375 million is due by the end of this month.
Pakistan has hinted at not entering into a new loan programme with the IMF though it only took about a third from the previous programme of $10.7 billion. Even with what Pakistan had received, it should have shown some progress in its economy, but actually the state of economy is even worse. The budget deficit stands at 2.6 percent of GDP for the first half of current fiscal year which experts believe would increase to seven percent of GDP by June 30, 2013, mainly because of FBR’s inability to achieve its revenue target. With foreign exchange reserves below $10 billion mark, $8.7 billion currently, the country’s economic outlook does not look satisfying at all.
However, it is the common man who is going to suffer the most. With degradation in PKR reaching about 39 percent since this government took over, other than a few temporary and flawed relief projects for the poor, nothing substantial has been done to alleviate their plight. The rich and mighty of the country seem to be living beyond the ambit of law, particularly unscathed by laws that attempt at levying any tax on them. Whole sectors, in unison, have been able to either exploit the loopholes in tax regimen or have totally avoided being included in the tax net. Parliamentarians, whose duty it is to implement tax on all, judiciously and equitably, are the ones who don’t submit their tax returns or would outright state that they own nothing taxable, or even if they do pay tax it would be peanuts compared to an average salaried person. Tax Ombudsman’s suggestion to the ECP that each candidate for elections should submit his tax return is one that deserves a follow through.
However, with elections around the corner and a new government coming into office in a few weeks, it appears that for politicians the economy would give way to political machinations and expediency. Something they will regret soon, rather than later.
