Pakistan’s economy is stuck in catch 22 situation with too many if and buts making it worse. The indecisions making it more complex. The decision makers, advisors are reluctant to take hard decisions thinking if those decisions didn’t give 100% results in another country how it will work in Pakistan, rather than learning from the mistakes of others and taking bold steps they are getting into their shells.
It is true the foreign debt is more crucial to country it is related with country’s sovereignty but the fiscal deficit is also as important as any other thing. The current ratio is hovering around 80% of which more than 50% is local debt.
In first 100 days of government finance related focus remain on foreign currency requirement which is in fact the first priority, but on local economy front only corrupt mafia crackdown appears on the front.
However the biometric verification of bank accounts is lost behind the non issue matters smog. This should have been done war footing like it was done in case of mobile SIMs biometric verification with very strict follow up.
The government’s aggression should have been apparent for bank account biometric verification. It should ask the relevant task force weekly or fortnightly report otherwise there is no benefit of doing it.
The IMF is also of the opinion that slowing down is not the matter of survival but stability and sovereignty is the point of survival. This is something to which everyone with sane mind will agree to. Everyone knows and understands stability will itself kick growth rate.
For stability Pakistan government need to get financial independence to meet ends. The stop over arrangements will never bring required level of stability to financial needs. The government is bound to take unpopular, bold and strict decisions.
The government cannot keep on playing with electricity, gas, existing tax payers, GST rates, this will burden the already burdened nation.
The incentives offered to people of Pakistan will not have the impact required to increase the tax base in Pakistan so it will not have any conclusive share in the desired results in enhancing tax base.
Now it is time for government to put on thinking cap and go for bold and brave decisions no matter if these are unpopular one.
First of all the government should focus and accelerate its efforts for biometric verification as quickly as possible with tight follow up on how many accounts has been verified and actions taken by non verified accounts with high level monitoring teams.
The second thing should be demonetization or fading out high value currency notes and ATMs to be configured so only small denomination currency notes should be dispensed. The slowing down of high value currency notes circulation will prove to be the best policy to counter corruption, make it difficult for the bribery to be reduced drastically. Even it will make terror financing by transportation of huge amounts due to unavailability of high value currency notes.
The third but very important point that needs to be addressed by government is to review the Foreign Exchange Companies (FEC) role and their operations, the Dollar/Rupee exchange rate parity is being skyrocketing every now and then, the reason not known to anyone.
Even the Finance Minister on the eve announced and the very next morning the Rupee nosedived against Dollar, the Foreign Exchange Company representative appeared on a private channel saying we just traded $5 million on the particular day, we don’t know why it has nosedived so naive on their part.
This should be investigated and the FECs’ role should be redefined with change in FECs trading role.
It would have been extraordinary initiative by government in 100 days if they have more intensive legislation and planning towards these issues as it would have eased the pressure on fiscal deficit, government cash flows and also put pressure on tax evaders.
I hope government constitutes think tank on these issues and priorities its legislation and efforts to counter these situations.