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Pakistan without IMF

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There is great pressure being applied on Pakistan to go to IMF. To some extent rightly. This in spite of the fact our financial state is much better now and as per Finance Minster, presently we are over the crisis and taking measures to improve in flow through increased export and reduced imports. The results will however flow by the end of the year. That makes a point , IMF is an option and being members , it is our right. But IMF always have political agenda and USA being major contributor have major say. Unfortunately the muck created by last two regimes both in financial and economic spheres is unprecedented. Even institutions have been subverted. By far Government has been engaged in fire fighting , sweeping courtyard on one side and facing resistance from civil bureaucrats who are used to freedom in corruption and lavish life style. One can see , grade 15/16 Officers plying cars worth over two million and so on .

But arranging money and paying older debts can not go on forever. We have to go to roots to put the house in order. Nation as a whole has to be first educated and media has to be brought in to confidence to do their national responsibility instead of making hero’s out of criminals. Prime Ministers first policy statements , about simplicity, must be perused at all levels in national life and body fabric. Not an easy task when we are, top to bottom, used to a life style of pump and show, which can’t be sustained. Food , water and clothes are three basic needs of a man . But , we see a totally indifferent attitude to waste all the three. Result, shortages impact whole economic cycle of the country. As a nation we earn less and spend more and then go out to borrow.

As the Government is trying to increase exports, a right policy but it will be some time before appreciable results emerge. A two prong strategy has to be adopted. Though we are signatories of WTO , in it , provisions exist to ban certain items as part of economic emergency. Some of the countries have invoked it. Or the resort to heavy regulatory duties. All luxury items , like cars, cosmetics, eatables available in Pakistan , pan Chalia be banned for two years initially and review later after two years. All subsidies must go but keep three items cheap as these are essential to keep costs of production low, and hit common man. This is Electric Tariff, fuel cost and gas. The fiscal gap be covered in other sectors.There should be different tariffs for industries and domestic users. Revenue shortages , we have been writing and saying at every platform , three steps are required, one , cut non development expenses by at least twenty percent, ban import of luxuries and non development goods at least for three years, FBR need massive shake up and reform. Time and again it has been suggested collect withholding and Sale Tax through trade bodies and associations on area to area and capacity basis. Keep FBR only for Corporate taxation. It is expected the revenue can increase by more than twenty time. It will reduce corruption and fear amongst SME,s and traders.

NIC be tax number and all should mention NIC number on receipt to ensure benefits to payees and stopping theft of tax collection. Corruption is main culprit.

There is a need to give specific incentive to revive export oriented industries . Like auto parts , ceramic, assembly of new generation of computers and accessories in collaboration with Pakistan , fancy wall lights , carpet and so many other value added industries in engineering sector. Mother of all industries is automobiles industry. Chinese , Arabs and Turkish investors be encouraged to set up electronic and computer related industries in special zones. Existing players have made it extremely difficult to enter a new player. SKD and assembly of any car / truck and commercial vehicle be allowed on submission of technical details to EDB. These wall of restrictions of Green , brown fields etc be done away. The government should keep an eye on quality and regulatory affairs.This will also allow vendor industry to develop. More so, debate on switch over to LHD be initiated as 85 % of world automakers produce in LHD. With CPEC , SPEC and entry of Russian federation all Central Asia and Europe is LHD.

To reduce cost of production cheaper electricity is key. In 2006 I had a meeting with British Bio Expert, Robert Ross, invited by Musharraf Government . His remarks after study that Pakistan has plenty of electricity and gas through bio technology, with one of the greatest number of cattle in Asia. New technology to crack bio gas give not only gas , heat , electricity and also organic liquid fertiliser, with over 20000 cattle dung , will provide about 5 MGV electricity and enough gas for small town and locality. Thus all villages and town can have their on bio plant and self sufficient in electricity and gas. Small and Medium industry can have cheap gas and electricity. This will free grid electricity for major industries.More so cost of electricity and gas will come down. A 5 MGV plant was being built at Karachi but abandoned due non cooperation from the city government. A new look is warranted . It will save billions.

Let’s not be called mismanaged people.
In nutshell a multi dimensional approach is necessary to over come our fiscal and management problems . Thus, local governments needs to be set up as early as possible.

The writer is a retired Brigadier, decorated in 1965-71 wars with SJ, SI (M), IS Gallantry (BAR). Is Secretary General Pakistan Russia Business Forum and is a Graduate from NDC. He can be reached at: tariqkhalil21@gmail.com