When to go for it: early or at the end?
The best time is either right at the beginning or right at the end. These are the pearls of wisdom of most advisors on economic destruction. They advise that these two periods are equally unaccountable. Thus politicians should target big money on entry or exit. The end-game destruction strategy is fairly self-evident.
Governments in this country who have served their period normally use or abuse all types of open and secret funds by bending and moulding laws to allow huge exodus of money, knowing fully well that by the time the next government takes over most of them will be sitting in Dubai, London or New York and then it will be the game of catch me if you can.
The other strategy not so obvious is to do it right in the beginning. A new government comes in, and the people are still basking over the hope that this time it will be different while media is still talking about the culprits of the earlier government. That is the time to do mega deals by riding over the deficits left by the earlier government and quickly sealing off billions of dollars worth of resources while constantly harping on the bankruptcy created by the last government. These deals get the benefit of the doubt by both public and media. The public, gullible and innocent as it is, and media still focusing on the pervious mega scandals, feel that maybe these deals were inevitable given the shortage of time, resources, people, skills or you name it.
The problem with doing mega deals later on is that the media is now hungry for fresh scandals and it is difficult to blame the previous government after a few years of being in charge. The strategy then is, come fresh, come charged, and hit those already hit so that they may not realize what pains more. And amid this chaos, the new ones just gulp down those mega bites.
The present government did exactly that. The budget was announced days after they officially held their office. It was terrible for the masses. All too visible were measures that too blatant tilted towards the rich. There was protest against it in the parliament but no party really took to the streets; everyone was new to the job and still undecided on which way to go. Thus despite some media talk and assembly protests, the budget sailed through without much trouble.
The provincial budgets were more palatable as there was a clear competitive display between them and at least the figures did not show too much of a deterioration in terms of taxes and duties. Similarly the circular debt issue was highlighted as being the short term relief measure on the escalating load shedding problems. The figure that was quoted in the beginning was Rs360 billion while finally we hear that Rs520 billion were paid to clear the debt.
Why is there a discrepancy in the figures and how has this money been raised to clear off the debt was not given due attention as they exploited the public demand for reduction in load shedding. In this hue and cry for relief in this chronic problem the whispers that some tycoons enriched themselves with escalated payoffs got buried.
Another advantage of making a rushed start is that in early days comparison with the previous government is either not made as it is assumed that past deals were the predecessors’ responsibility or not debated too much due to expediency of the issue. Nandipur project is one example where in a hurry the prime minister ordered that this should be revived, as energy is a priority. It was only a former MD who highlighted the misappropriations going on that spiked the project cost by Rs15 billion. In fact the latest reports have shown it as Rs58 billion with daily increase in its estimate. However under the pretext of energy shortfall the project has been approved and why its cost has escalated to this alarming level is a matter almost overshadowed by our screaming energy needs.
While the focus has been on getting electricity projects initiated, gas deals made get only occasional mention. The LNG deal with Qatar is only a back page subject despite the heavy implications on the cost and its burden on the exchequer. Some serious omissions have been covered up. It is not a government-to-government deal but Pakistan government is dealing with the representing US firm, Philips Conco in Qatar. This raises the chances of further kickbacks and commissions. The quoted price is supposed to be $18 and it will be a deal that will bind us for 20 years. Research reveals that India did a deal with the same company on $13. Another factor to consider is that the alternative shale gas has not been considered. Shale gas is available in the US and Europe in abundance at a price of $10.
While all this commotion of load shedding and presidential election is going on, the rupee has slid dramatically from Rs98 to Rs105 in the open market. Such steep devaluation went unnoticed for quite a while without any intervention from the State Bank. Each rupee devalued costs additional Rs100 billion on debt repayments. But each rupee devalued appreciates the value of the billion dollar assets stowed away in foreign countries by nearly all our major politicians. Thus we have witnessed this trend as the country becomes poorer, our politicians become richer.
All these rushed hush-hush measures have caused serious damage to an economy that was already reeling under a mountain of debt. Electricity prices are shooting up, diesel and petrol price escalation is almost unstoppable with the result that in July the official inflation was reported at an all time high of 20 per cent.
The government has made a simple offer and explanation to the people of Pakistan. The choice is: either burn in hell without electricity or die paying through your nose for it now and later. This is what the present government has to offer to the millions who innocently believed in its rhetoric of ‘Roshan Pakistan’.
The first hundred days of a government are always crucial. In this case it seems they are not meant to give relief and direction to the economy but to deliver deadly economic blows – before those being hit recover enough to hit back.
The writer is an analyst and columnist. She can be reached at andleeb.abbas1@gmail.com