Imtiaz Gul
Pakistan is currently firmly in the clutches of the status quo. Caught in a steel-frame comprising the bureaucracy, PTI’s financiers (many of whom are now in coveted governance positions), and geo-politics.
Financiers – lots of whom are now special assistants/advisors – have gone all out to bag lucrative import deals – sending import bills through the roof and straining the country’s scarce foreign exchange reserves. The demand on existing automobile Assemblers for complete transfer of technology has disappeared.
The predatory bureaucracy continues to rely on an excessive and unpredictable taxation regime – the primary factor that is inhibiting western foreign investment. Most foreign diplomats have been complaining about the unpredictability in import tariffs and fees on services. No foreign company will risk its capital if it is not guaranteed fixed taxes on its imported raw materials, for instance, for at least five years.
No surprise the same bureaucratic wizards have forced the PTI government into literally begging the IMF for resumption of the special $ 6 billion loan.
At what cost?
To secure the nearly $ 500 million instalment, the government has agreed to gradually raise electricity prices by Rs5.65 per unit or 36% from untill October – a measure loaded with a burden of Rs884 billion on the consumers – by or before June 2023.
But the it wont stop here; the 11 actions the government has also agreed include new taxes equal to 1.1% of GDP or around Rs600 billion in June to satisfy the IMF.
On the face of it, the IMF programme should spur growth by removing all regulatory bottlenecks but without any addition to the exportable capacity, and with geo-politics playing out in its worst form, how can such a programme ensure growth while it opens floodgates to crushing inflation for the common man?
Why do we need the resumption of a loan programme which hinges on total technical compliance whereas its nature has is now totally political? We will get only a tranche of $ 500 million this year but would automatically subject the dominant of Pakistanis to the worst ever inflation.
So, the basic question; is the PM aware of the havoc the IMF loan will play with common people who are already reeling from a vicious inflationary cycle?
Is Khan aware that the International Monetary Fund (IMF) as well as the Financial Action Task Force (FATF) have become the facilitating mechanisms for geopolitics which looks unfavorably at the Sino-Pak partnership?
The latest proof of geopolitics came from the UK government which has added Pakistan to the list of undesirable 21 high-risk countries with unsatisfactory money laundering and terrorist financing controls. This list of 21 nations essentially replicates the one released by FATF.
Only a week earlier UK had put Pakistan on its COVID19 Red List.
With an influx of dollars through remittances worth nearly $ 25 billion why should Pakistan allow itself to be squeezed by a loan program that will severely deplete the common man’s buying capacity.
But it seems, the only sweet music to PM Khan is the “Riasate Madina” narrative that special advisors and close aides continuously whisper into his ears. And hence no surprise that his entire focus is now on “meals on the wheels” and shelters. Has he lost hope with the reform of a system that continues to stunt growth and also reels from anti-China lobbies within the governance structures? Riasate Madina had no IMF. Nor did it face geo-political challenges Mr.PM!
