Better late than never, the government finally realizes that a smaller cabinet with lesser ministries is the best option to begin breaking the ice initially. A gradual rightsizing has begun with the immediate elimination of five federal ministries while another five will be chopped off in February, and it is likely that downsizing will continue for some time to come. This is a step in the right direction. Trimming the fatty ministries should have been done long time ago.
Painfully, the last three years have been severely rough and tough for the vulnerable masses that are facing yet another round of price hikes and a country wide food shortage. The economic stability is nonexistent. The patience of suffering population has already exhausted.
Despite the World Bank’s approval of $250 million loan and a $35 million grant to support recovery efforts in the Khyber Pakhtunkhwa (KP) province and Federally Administered Tribal Areas (FATA), there are other economic issues of immense national importance that haunt the nation day and night. Most likely, the government will have to borrow from the State Bank of Pakistan with all its adverse consequences for the economy and the people.
Indeed, the bitterest reality is the ongoing pile up of heavy foreign debt load. Whereas the poor governance, zero economic growth, a missing financial sovereignty, and the nonexistent foreign investor’s confidence have been hindering Pakistan’s recovery – is extremely disturbing and thought provoking of course.
Unfortunately, the evil of falsehood dominates in Pakistan, which is responsible for blind folding the naive masses about horrible consequences of prolonged political instability and economic stagnation. Unless Pakistan comes out of the “never ending cycle” of misfortune, ignorance and poverty, there isn’t any hope for betterment.
Politically motivated economic decisions made by the politicians with respect to allowing multinationals virtual monopolies, permitting corporate farming, building new dams, power plants and education system always lead to non justified actions.
Shameful sabotage of gas installations has not only disrupted the supply of Sui gas to the nine districts in Baluchistan, but the gas supply to some parts of Sindh, the whole of the Punjab province and other parts of the country have also been severely hampered in deed. Nevertheless, the responsibility has been claimed by a militant nationalist organization. Yet, similar attacks on the gas supply system have been carried out successfully in the past. Unfortunately, it is virtually impossible to protect every inch of the pipes that stretch out from the gas fields in Sui to other parts of the country; therefore, an increased or stepped up security won’t be able to handle the menace in the normal manner.
So disappointing is the badly crippled revenue generating capacity which is beyond an easy fix. The industrial sector has been severely hit sending a large majority of workers home for good. The government miserably failed to deal with load-shedding and the poor gas supply.
Among several other factors, the curse of feudalism seems to be one of the leading sources for Pakistan’s economic disability and disparity leading to criminal activity including misappropriation and looting the resources. Since its independence, Pakistan has not been able to have a true democracy just because of the prevalence of feudalism. There is a stubborn hurdle in educating the masses, and such a constant lack of education leads to a massive economic retardation. Feudal lords get elected to the parliament due to their dominance. No importance is given to integrity and merit at all. Furthermore, the poor people cannot move an inch against the wish of this elite class. Even the independence of national institutions is corrupted by this group. They always prefer to have their dear ones selected for the positions of power and authority in the police and civil bureaucracy. Competence stands no chance at all.
Inherently defective political system of Pakistan has always enabled the feudals, industrialists, bureaucrats and the generals to go beyond limits. The environment is ripe for the insincere, incompetent, inefficient, corrupt and selfish class of people to flourish.
Beyond doubt, without a viable economy, the political environment will stay non-stable. Thus, a weak government poses the greatest threat to the economy and national security.
Now the good news: Fortunately, Pakistan has huge untapped coal reserves, one of the largest in the world, which if explored with the right investment would certainly overcome the current electricity crisis. Furthermore, Pakistan is also blessed with one of the world's largest copper and gold reserves. In fact, just with one mine in REKO DIQ (BALUCHISTAN) is worth more than enough to pay off its entire foreign debt.
Although, according to State Bank of Pakistan (SBP), the country’s total liquid foreign exchange reserves witnessed an increase of 190 million dollars during the week ended January 15, 2011, climbing to a record high at 17.28 billion dollars. The foreign exchange reserves held by SBP were 13.65 billion dollars and net foreign reserves held by banks (other than SBP) 3.62 billion dollars. Yet, the government has no funds to continue with the required payments to debtors nor does it have any financial capacity to carry out national projects of extreme economic importance.
What needs to be done: Broaden the tax base including the RGST and directly taxing the agricultural income. There should be capital gains tax on the stock market and the real estate as well.
Get fiscal house in order on urgent basis. Chronic condition of the national economy requires urgent attention too. A consensus is required to facilitate a peaceful revolution to rid the country of all corrupt elements. Such operation must start indiscriminately from the very top and of course - gradually climbing down to the grass root level. Special constitutional amendments through the national Parliament are needed to affect all areas regardless of the immunity.
Since, Karachi is the commercial hub of Pakistan which is being reduced to a war zone between ethnic groups. Target killing scenario is a danger sign of a strong possibility of Anarchy and Civil War. There is an urgent need for an overhauled governance mechanism in place before it is too late.
The best solution is: All politically motivated recruitments in the judiciary and the police in Karachi must be reversed right away in the best interest of the country. If Karachi bleeds and descends into total chaos, the repercussions will be catastrophic not only for the Karachites but also for the whole country.
It is strongly suggested that strengthening the federal set up is the way out to tackle all the economic and political ills. Provincial powers should be delegated to the Divisional Commissioners throughout the country for the sake of better administration. There is no need of provincial administration, provincial assemblies or provincial governors. Deputy commissioner/district magistrate is good enough to have a better grip on the corrupt people.
A simple system of governance means an effective control on lavish spending. Remedying mismanagement and eliminating corruption within the government will pave the way for further remedial activity. Some kind of mechanism to protect the vulnerable sections of the society should be in place before it is too late. A coherent strategy is needed to genuinely develop the economy by investing in its key sectors to resolve Pakistan's chronic and systemic issues. General sales tax reforms and land reforms will definitely be beneficial to the whole society.
In addition to restructuring, reshuffling and reducing federal ministries, the 10-point agenda must be fully implemented by the deadline. As claimed, the said agenda is aimed at addressing the crucial problems including price control formula, electricity and gas shortages, lawlessness and the messy financial crisis. All political parties should be on the same page when it comes to eradicate economic woes.