Circular failures

The usual false arguments and glossing over facts

So, would the circular debt resurfacing – and with such astonishing speed – amount to egg on the face of some, at least one, of the government’s corporate, banker, super-rich, advisors who hammered the one-time-payment idea till Ishaq Dar actually did it last year? Not if you ask the government. And definitely not if you ask the IPPs, or they would not have had the audacity to approach the water and power ministry to pressure Dar sahib into a rerun of last June 28. If it can be done once why can’t it be done again is not the easiest of arguments to rebut. It is an altogether different matter, of course, that the jury on the legality of the SBP’s transfer of Rs480 to clear the IPP circular debt is still out.

Also, did someone notice the doublespeak in the water and power minister’s argument? Stressing the circular debt will not end in one year is one thing, especially after effectively ending it in the government’s first couple of months in office, but holding ‘provincial governments and giant corporations’ responsible, without blinking, is quite another. Surely Khawaja Asif’s accusation would have ruffled some feathers at the party HQ, home to the largest provincial government and run by owners of quite a few of the giant corporations in the land.

There should be a clearer, and more precise, explanation of just how and why the debt rose again, and at such speed. Last time it took almost five years for it to grow to near Rs500 billion. This time it has grown in excess of Rs300 billion in a matter of nine months. And while it was typical of Khwaja sahib to quickly shift the argument to how many more thousands of MW we will be able to generate shortly, and how China will also help us overcome our energy shortage, there is always glossing over the fact that we have enough generation capability, just not enough muscle to make big players pay. And unfortunately, many in the previous and present government constitute the black sheep that continue to wreck the system for one and all.

There’s not much good news on the 3G, 4G spectrum auction front either and, if reports are correct and official government denials mere usual propaganda, Dar sahib is livid. And, rightly so. April 23 will show for sure, but the word is that expectations of $2 billion from the auction are unlikely to prove right and that too by approximately $1.5 billion. And however much proponents of democracy, especially those in power, argue the economy is still on an uptrend in our representative system, few will be able to convincingly argue it is in better shape than under the dictator now on trial for treason. If not much else, the PTA definitely saw better days under Musharraf, the telecom sector thrived and generated hundreds of thousands of jobs.

No such optimism presently though. The auction disappointment delivers a cruel blow near budget time, and Islamabad will now have to revert to its old habit of borrowing to finance its government. That the government has invested time and effort in tackling these problems is appreciated. But in going its usual way, propping up and patching deep wounds artificially, it has only ensured repeated failure. Instead of employing political spin on the economy, the government must look at real problems, the biggest of which are failure to collect dues, and improve the security situation so foreign investors can be invited back.