Abdul Qayyum Kundi writes about the economic issues in Pakistan including the rising inflation and argues that the opposition parties are not acting as responsible opposition over government's failure to contain the crisis.
A few days ago, Pakistan People's Party (PPP) Chairman Bilawal Bhutto Zardari criticised the government's IMF package and demanded it be reviewed. The PPP's chairman's statement is nothing but an eyewash because the question I have for Bilawal is where was he when we opposed the IMF package and demanded that we will not support it unless it comes with a structural reforms package. On February 12th, 2019 I issued a public statement that contained the following about IMF Package negotiations:
“I am not against taking an IMF bailout but my support is conditional. The IMF deal will benefit the country only if the government proposes an economic reform package that includes some tough decisions including expanding the tax net and requiring elites of the country to pay their fair share.“
At that time none of the so-called opposition came forward to support our position. There was no meaningful debate about the package in the parliament. The package sailed through the approval process without a hitch. The question here is that why no opposition was offered. The answer is simple: all three status quo parties PML N, PTI, and PPP are IMF friendly and always eager to fund their deficit governments through their bailout packages.
They did not want to anger them and hurt their chances of future such packages. Not only that the political engineers are also eager to appease IMF or petrodollar rich countries to gain bailout packages. The current finance minister is considered their blue-eyed. These status quo parties and their facilitators have kept this nation subjugated and enslaved for their narrow vested interest.
The key difference between the economic policies of PML-N and PTI is that the former delayed the onslaught of inflation while the latter imported inflation. Finance Minister Ishaq Dar kept the exchange rate stable so that the government has a breather but that time delay should have been used to introduce deep structural reforms. These were important to make the economy self-sustaining and attain a growth trajectory.
The current government, on the other hand, has imported inflation by agreeing to deep depreciation of exchange rate, almost doubling the interest rates and offering tax loopholes and fiscal incentives to mafias.
PML-N delivered some big infrastructure projects which I also supported as we need that too but the trickle-down impact of these projects was minimum. The current government has not delivered anything and even then the tax burden has increased from Rs. 10000 billion to Rs. 11000 billion. Where has this money gone? It is simple math most of it has gone into increased debt servicing and subsidies to the mafias that are having a field day in the country.
The government is expecting the poor and middle class to carry this burden through indirect taxes on goods and services as well as income tax on the salaries. On the other hand, the rich are still exempted from paying their fair share of tax. Shabbar Zaidi, an expert in preventing tax evasion, is on his way out.
The technocrats who have been borrowed from IMF especially the finance minster and SBP Governor have failed miserably, as was expected of them. They simply do not understand the misery of the people. These highly paid technocrats live in a bubble and that is the main reason why IMF has never been able to help a country solve its economic issues.
They may provide temporary relief like morphine given to a patient feeling deep pain but eventually it causes death. Our rulers consider IMF packages as free money that can be used to provide subsidies to the elites while the burden of repayment falls on the poor of the country. None of the 13 IMF packages were accompanied by reforms.
Today it is clear that our position was correct on the IMF package. I consult about half a dozen economists who are supporters of our second republic proposal. All of them agree that without structural reforms, the band-aid solutions will further aggravate our economic problems. The failure of economic, social, and foreign policy has made it clear to the nation that PTI, PML N, PPP and are all cause of our problems rather than a solution.
I am in contact with smaller parties to fill the vacuum as the opposition is non-existent and offer some real opposition to alleviate the misery of the people. I had suggested to them that PML N and PPP should be removed from the joint opposition as they have failed to play their part. I am glad Maulana Fazl-ur-Rehman has announced it. In the coming days, I will be sending them some more suggestions.
I do not support the formation of a national government or new elections. In both these options, the current incapable lot will be back in power and our issues will remain as none of them have any solutions. The only viable option is to develop the second republic. It is enviable and unavoidable.
A few days ago, Pakistan People's Party (PPP) Chairman Bilawal Bhutto Zardari criticised the government's IMF package and demanded it be reviewed. The PPP's chairman's statement is nothing but an eyewash because the question I have for Bilawal is where was he when we opposed the IMF package and demanded that we will not support it unless it comes with a structural reforms package. On February 12th, 2019 I issued a public statement that contained the following about IMF Package negotiations:
“I am not against taking an IMF bailout but my support is conditional. The IMF deal will benefit the country only if the government proposes an economic reform package that includes some tough decisions including expanding the tax net and requiring elites of the country to pay their fair share.“
At that time none of the so-called opposition came forward to support our position. There was no meaningful debate about the package in the parliament. The package sailed through the approval process without a hitch. The question here is that why no opposition was offered. The answer is simple: all three status quo parties PML N, PTI, and PPP are IMF friendly and always eager to fund their deficit governments through their bailout packages.
They did not want to anger them and hurt their chances of future such packages. Not only that the political engineers are also eager to appease IMF or petrodollar rich countries to gain bailout packages. The current finance minister is considered their blue-eyed. These status quo parties and their facilitators have kept this nation subjugated and enslaved for their narrow vested interest.
The key difference between the economic policies of PML-N and PTI is that the former delayed the onslaught of inflation while the latter imported inflation. Finance Minister Ishaq Dar kept the exchange rate stable so that the government has a breather but that time delay should have been used to introduce deep structural reforms. These were important to make the economy self-sustaining and attain a growth trajectory.
The current government, on the other hand, has imported inflation by agreeing to deep depreciation of exchange rate, almost doubling the interest rates and offering tax loopholes and fiscal incentives to mafias.
PML-N delivered some big infrastructure projects which I also supported as we need that too but the trickle-down impact of these projects was minimum. The current government has not delivered anything and even then the tax burden has increased from Rs. 10000 billion to Rs. 11000 billion. Where has this money gone? It is simple math most of it has gone into increased debt servicing and subsidies to the mafias that are having a field day in the country.
The government is expecting the poor and middle class to carry this burden through indirect taxes on goods and services as well as income tax on the salaries. On the other hand, the rich are still exempted from paying their fair share of tax. Shabbar Zaidi, an expert in preventing tax evasion, is on his way out.
The technocrats who have been borrowed from IMF especially the finance minster and SBP Governor have failed miserably, as was expected of them. They simply do not understand the misery of the people. These highly paid technocrats live in a bubble and that is the main reason why IMF has never been able to help a country solve its economic issues.
They may provide temporary relief like morphine given to a patient feeling deep pain but eventually it causes death. Our rulers consider IMF packages as free money that can be used to provide subsidies to the elites while the burden of repayment falls on the poor of the country. None of the 13 IMF packages were accompanied by reforms.
Today it is clear that our position was correct on the IMF package. I consult about half a dozen economists who are supporters of our second republic proposal. All of them agree that without structural reforms, the band-aid solutions will further aggravate our economic problems. The failure of economic, social, and foreign policy has made it clear to the nation that PTI, PML N, PPP and are all cause of our problems rather than a solution.
I am in contact with smaller parties to fill the vacuum as the opposition is non-existent and offer some real opposition to alleviate the misery of the people. I had suggested to them that PML N and PPP should be removed from the joint opposition as they have failed to play their part. I am glad Maulana Fazl-ur-Rehman has announced it. In the coming days, I will be sending them some more suggestions.
I do not support the formation of a national government or new elections. In both these options, the current incapable lot will be back in power and our issues will remain as none of them have any solutions. The only viable option is to develop the second republic. It is enviable and unavoidable.