Economists dub IMF bailout, sell-offs economic suicide for new government

As the newly-elected federal and provincial governments are readying to unveil their fiscal plans within next couple of weeks, the economists and experts believe the PML-N led government should do away with stereotypes while proceeding with the significant job.
Some economic analysts whereas proposed presentation of the federal and provincial budgets in the last week of April, others termed it the “biggest challenge” for Nawaz regime to make FY2013-2014 compatible to its election manifesto. The economists also warned the new government against going for a fresh IMF bailout that, they apprehended, would be tantamount to committing economic suicide. The experts on budget reporting suggested that the standing committees, backed by the elected public representatives, in the country’s legislatures must have a proactive role in budget-making.
Saturday saw renowned economists Dr Kaiser Bengali and Dr Shahid Hassan Siddiqui and senior journalist Habib Khan Ghauri educating economic reporters at the annual “Budget Reporting Workshop” organized jointly by Karachi Press Club, Karachi Union of Journalists and JournalistLink.com. In his presentation on “Capacity Development Workshop: Effective and Transparent Coverage of Budget 2014”, Dr Bengali said the parliament had been lacking a direct link with the budget making process in Pakistan. The fiscal plan in Pakistan, he lamented, was for years being prepared by the bureaucracy and not elected representatives of the masses.
“Almost 90 percent of the parliamentarians even do not carry the budget documents along after the budget session,” the economist said.
He proposed that unlike past practices the budgets, both federal and provincial, should be unveiled in the legislatures in the month of April. Last Saturdays of the said month, he said, was the ideal day for budget presentation. “So the lawmakers could have enough time of at least two months to discuss the fiscal document in detail,” said Dr Bengali, former advisor to Sindh Chief Minister on finance. To a question on the new government’s tilt towards privatization of the loss-making state institutions, the economists said any such move by Nawaz government would bring no good to the economy.
He revealed that during Musharraf’s era at least 90 industrial entities were sold off, but the buyers had acquired those units only to benefit from their highly valuable land and not operational purpose. “No businessman buys loss-making entities,” the economist maintained.
Dr Shahid Hassan Siddiqui warned the new government against availing a fresh IMF bailout package that, he claimed, was being offered, uncalled for, by the international lender to provide enough dollars to Pakistan to bear the new losses on the War on Terror front.
He said during five years of its term the previous PPP-led coalition government had borrowed from the IMF $8 billion on which losses in the War on Terror were a major drain.
“The billions of dollars borrowed did not benefit the masses,” the economist said adding that heavily-indebted Pakistan, facing a huge budget deficit of Rs 2 trillion in FY13, was to pay Rs 1.1 trillion as interest on Rs 16 trillion the cash-strapped country had borrowed so far since 1947. He revealed during five-year PPP rule had added Rs 9 trillion to Pakistan’s Rs 6.9 trillion total debts now amounting to around Rs 16 trillion.
Since 1980, Dr Siddiqui claimed, Pakistan had availed nine IMF programs, seven of which had failed to serve their purpose for the borrowed money catered only “unproductive” expenditures of the successive governments. “If prepared in line with IMF conditions the new budget must not be acceptable to the troubled masses,” he said adding the PML-N led government must base its budgetary priorities on its election manifesto.
Three items of its manifesto, Dr Siddiqui advised the PML-N to materialize are: taxing all incomes, broadening of the tax net and computerization thereof and taking steps to whiten the black money. Terming huge tax evasions and extravagance of rulers as major issues to be addressed, the economist said Islamabad should bank upon the “strategic partnership” of China which reserved $3.4 trillion dollar reserves compared to that of the United States possessing $450 billion only.
Habib Khan Ghauri, former president and secretary of KPC, educated participants of the workshop on what salient features they were required to cover budgetary sessions of the federal and provincial assemblies. The seasoned journalist lamented that the Standing Committees were, ideally, meant to propose funds’ allocation under the Annual Development Plan (ADP) in the light of recommendations forwarded by the lawmakers on what was needed in their respective constituencies.
Khan, however, said except Public Accounts Committee (PAC) the committee system, by and large, could not work during past five-year rule of the PPP government. “The (former) PAC chairman (Jam Tamachi Unar) had perhaps caused so much embarrassment to them (his party) that he was not given a party ticket for contesting (May 11) election,” said he. Urging the need for improving the committee system, the senior journalist said the reporters should highlight the budgetary allocations for health and education sector that bore a trickledown effect on the common man. To a question, Khan said the financial state of affairs during the previous Sindh government remained dubious thus lacked transparency.