Averting the crisis

We stand nowhere on the global index of productivity.

Pakistan stands at an unprecedented grinding halt in every dimension a country might have. The terms and conditions are humiliating and very hard against which the IMF agreed to help us to forward the default to the next episode. Default is still hover­ing over our heads as six months are not so far off when we have to re-knock the door of IMF. The dollar has been uncapped on the demand of the IMF and 170b taxes have been imposed on the existing taxpayers. It’s been the tradition of the government to axe the existing handful of tax­payers instead of expanding the tax net. In Paki­stan, the single-digit GDP tax ratio is a mockery. In a population of 240 million, only 2.154 million are taxpay­ers, not even 1 percent of the total population; the genu­ineness of the declared amount is another big question every one of us knows. Out of a total of 2.4 million retail­ers, only 25000 are taxpayers that too in three big cities. The poor governance and irrationalities are countless. Unfortunately, we are still not sensitized about the situ­ation we are going to face after six months.

A panicky situation aggravates the conditions, and ev­eryone hoards or invests in a commodity that creates ar­tificial demands and inflation or transfers foreign curren­cy to safe havens. Expatriates stop remittances. Concrete measures need to be taken to eliminate panic as a rudi­mentary step. For a long period, we have been feeding our sick units by extracting the blood of the masses to meet the loss of those white elephants. These assets have become liabilities that need to be privatized as early as possible. Only 44 SOEs can transform the economic land­scape of the country. The total loss of these enterprises is said to be about 10 percent of the GDP. And if these assets give 10 percent profit, its compound effect would be 20 percent of GDP (60b) dollars. It may be noted that state-owned business enterprises have a worth of $119 billion. What is the harm if we pay off our debts by selling all the sick units? The benefit is we can save the debit servicing amount to 36 percent of the total national budget; low in­put will enhance the regional industrial competitiveness and the size of our export basket.

Allow the private sector to generate electricity by con­structing mini dams. India overcame this by extroverts and getting the private sector on board. Cuts in non-de­velopmental expenditure and austerity is the utmost need. The United Kingdom has only 45 state vehicles, and we have 150000. The non-combat defence bud­get may be reviewed without compromising the combat portion. Circumstances demand a complete ban on lux­uries and non-essentials. Another big spending on im­ports is our online shopping and spending while we are abroad. Localization and technology transfer must be en­sured while granting licenses for manufacturing to for­eign entities like India. Had the foreign companies pro­moted indigenization, today they would not be suffering from important issues. There is no check on the price and transfer in Pakistan. Smuggling should be eliminat­ed with iron hands. No mercy should be for the smug­glers damaging the industry, national exchequer, and sov­ereignty. Expansion of the tax net is a must if we wish to avert the default. At least 20 million new payers should be brought into the tax net instead of extracting the ex­isting tax-payers over and over. It must be coupled with ease of doing business, minimizing departmental cogni­zance. After land, gold is the commodity wherein we have dumped the money. The time has come to introduce the 16-carat gold in Pakistan. Both gold and real estate need solid and revised policies.

We stand nowhere on the global index of productivity. We have to double the productivity in one year through efficiency and effectiveness. We need to come out of the pressure not to buy cheap oil from Iran and Russia. Our total import bill of petroleum is 23.4 billion; a 15 per­cent discount means a saving of 3.5 billion. We need prop­er legislation to cap the size of the houses for the Govern­ment officers and ministers. Dwelling in homes of acres is a mockery to this poor nation, the majority of which lives under the poverty line. These are the measures we can de­rive immediate economic relief and can avert the default for sure. Only a strong will is needed to execute them.

Ghulam Murtaza

The writer is a freelance contributor and Secretary General of the Pakistan Association of Automotive Parts and Accessories Manufacturers

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