(Qarz ki peetay thay mai aur samajhtey thay key haan rang laavegi hamaari faaqa masti aik din) Averting the economic meltdown..!

Qarz ki peetay thay mai aur samajhtey thay key haan
rang laavegi hamaari faaqa masti aik din

It seems that our economy is a fit case for putting it under ICU, considering that usable foreign currency reserves available with all commercial banks have slid to a mere $200 million.

Moreover, it has been reported that the net foreign currency reserves of the central bank would stand close to $4.5 billion even after including $2.5 billion that Pakistan borrowed last month from international debt markets; and that the $5.8 billion amount has to be excluded from the SBP’s gross official reserves of $15.1 billion, which will bring down the reserves to $9.3 billion. Further, another $4.8 billion have to be excluded on account of repayment of external debt in the coming months.

The gravity of the economic situation of the country can be further gauged with the fact that while the GDP was $304 billion our total domestic and international debt was +$250 billion which was + 82% against 60% limit set out in the Fiscal Responsibility and Debt Limitation (FRDL) Act of 2005 for the debt reduction path.

Recently, the International Monetary Fund (IMF) has asked Pakistan to adopt a new legal framework for public finance management, aimed at stopping the country from borrowing recklessly and ensuring strict oversight of parliament on unchecked expenditure, which in other words means adopting strict austerity measures.

Moreover, a report of the finance ministry has confirmed that by June this year seven out of nine debt sustainability indicators have weakened.

Our Ministry of Finance is culprit of misusing another avenue – the supplementary budget, which is issued during the course of the fiscal year, without prior approval of the parliament.

The finance ministry has (mis) used this avenue to buy luxury cars, pay subsidies to sugar barons and finance the expenditures that it deliberately camouflaged, at the time of the new budget’s approval, to hide the actual budget deficit.

In this regard, the issue of massive corruption coupled with increasing cost of living has forced even the middle class people, to take out their children from good private schools to average schools; and increasing incidents are being reported about suicides, due to the economic hardships and poor mothers giving birth on roads and floors of the hospitals.

To further add to the problems of the poorest of the poor population of about 14 crore Pakistanis, who are barely alive or living with daily income of maximum 2 dollars per day, the rulers have decided to further increase debt burden of the country; by agreeing on 8 December, 2017 with the IMF, to depreciate Rupee, which has the following two pronged adverse affects on the poor people:

Firstly, the cost of almost 100% items suddenly increases and secondly, every single Rupee devaluation, increases our total loan, by a whopping $2.5 billion.

Moreover, recently the government further increased the debt burden with an amount of $2.5 billion by floating bonds in the international market with extremely high interest rates (which discreetly includes waiving a dozen taxes to make deals more attractive for investors).

Under the foregoing circumstances, in order to avoid the dreaded melt down of economy, we will have to invent homegrown solutions to revive our economy, which in fact, is now a matter of survival of our nationhood.

Every sane person in Pakistan knew well in advance that Mr. Ishaq Dar will ultimately sink the country economically; and ditch it after recklessly borrowing loans, with interest rates as high as 8.25%, which till date, stands as a world record, for highest interest rate.
The solution for Pakistan’s economic malaise can not and never be found in getting loans to repay the loans and to build false foreign exchange reserves with loans.
The cardinal rule to build a sustainable economy is to live within the means; for which austerity is the secret of success.
In Pakistan, we can easily control our expenses, if the following statement is adopted as a motto/mission; and implemented as an official policy, and is also displayed in the offices of the civil and military bureaucracy, just below the portrait of Quaid-e-Azam Muhammad Ali Jinnah Sahab:
“Recall the face of the poorest and the weakest man whom you may have seen and ask yourself if the step you contemplate is going to be of any use to him.”
Moreover, the following austerity measures may be adopted on emergency basis till our budget deficit is overcome and total government debt is repaid:
1. No officially paid foreign treatment for any government official or public representative be allowed without exception.
2. No government official or public representative be allowed air travel (domestic & foreign) in business/first class, on official expense.
3. No foreign tours for government officials and public representatives on official expense, without the permission/clearance of the chairman NAB. In this regard, for the foreign visits of President, Prime Minister and CM’s, no more than two persons shall accompany them on official expense.
4. All public sector organisations/corporations/
companies and sports organisations falling under the purview of the federal and provincial governments of Pakistan, must be headed by a private sector person, who should be suitably qualified, experienced and duly recommended by the Federation of Pakistan Chambers of Commerce and Industry/PEC/PMDC and other such relevant apex bodies. Moreover, all such organisations must be bound to send their internal, external and special audit reports to the Chairman NAB on regular basis.
5. Immediate issuance of orders for 50% reduction in protocol expenses (specially the motorcade) of all VVIP and other government and public servants and representatives.
6. No subsidised food and other items be allowed to be served, in the canteens/restaurants/kitchens of the President/PM houses/offices, Senate, National and Provincial assemblies.
7. Complete bar/ban on any development allocation to the parliamentarians.
8. Total ban on announcements of funds/packages for development schemes by the President/PM, CM’s and anyone for any area, community, scheme, organisation, body or NGO. All such decisions should be mentioned in an organised manner in the annual budget.
9. No announcements by any government functionary of rewards for players/board employees of sports board/body/Federation etc from the national exchequer, as was recently done in July last, to the cricket players and employees of the PCB, after the victory in the Champions Trophy, when besides players, board employees were also given crores of Rupees from the national exchequer of the country, which is obtaining loans to repay its debt.
10. Strict moratorium on purchase of news cars/vehicles by any government department or organisation, before 10 years use of the old car.
11. Complete ban on official entertainment (Breakfast, Hi-Tea, Lunch or dinner) except one dish serving for any local and foreign guests.
12. No payment (in any official legal case of government or its allied departments/organisations) to any lawyer on government expense over Rs.1 million. Beyond this amount payment approval must be obtained from the chairman NAB.
13. Only one premises should be given the status of President House, Prime Minister House, Governor House and the Chief Minister House.
Besides the above austerity measures, the following steps are also suggested to rejig the national economy on a fast track mode.
1. Request to all foreign donors for a 10 years moratorium, on all debt repayments by Pakistan, which is a frontline state of the world’s war on terror (WOT). Here, don’t forget that the world powers have totally written off loans of many countries, for much less cooperation than Pakistan, which is practically fighting their war, for more than a decade and a half.

2. 20% per annum reduction in all non-developmental government expenditures, plus total freeze in all perks paid from the national exchequer, involving foreign currency.

3. Maximum tax rate on each and every type of income in Pakistan should be fixed at 10%. This will not only bring huge revenues to the government, but will also discourage the tax evasion tendencies.
The size of our undocumented economy is almost equal to the yearly budget of Pakistan.
The best way to minimise black money is not the launching of amnesty schemes, because the black money keeps flourishing after taking advantage of such facilities. If we really want to deal with the menace of undocumented economy on a permanent basis, the ideal way is to either eliminate taxes or reduce the rates of taxes to a minimum level i.e., not more than 10%. This low level of tax rate will not only spur an economic boom, but will also automatically encourage people towards paying the taxes; rather than giving bribes to the government officials to save higher payments of taxes.

4. Impart training on war footings, of various modern skills to the country’s huge unskilled manpower, for increasing the industrial and agricultural productivity, competitiveness, value addition & exports.

5. Special support and incentives for developing world class facilities for enhancing income from tourism sector, which should encompass religious, medical, educational, hunting, entertainment and traditional tourism, specially keeping in view how rapidly Dubai has become a world tourist destination, by juxtaposing technology with innovative ideas. In technology and innovation Pakistan will have to be one step ahead of Dubai and Singapore.

6. Set a target for 20% per annum increase in foreign remittances, by offering innovative incentives to expatriate Pakistanis, which should even attract foreigners to park their money in Pakistan.

7. Outsource FBR functions (which will alone increase income by Rs.1000 billion) & IMPOSE FLAT 10% tax on ALL & EVERY TYPE OF INCOME (as already mentioned at 3. above), without any exemption (except for the security forces personnel, whose salaries may be doubled with expected receipt of un-precedented increase in revenues). This will not only reduce income tax burden on salaried class (with max. tax rate of 10%. Here don’t forget consultants are already paying 10% tax), but will also result in so much increase in revenues, to the extent that government will not require any tax fresh imposition, in the budget. Plus, the government will be able to give tax free salaries to all the armed forces, rangers, police and other security agencies personnel, who are shedding their blood, in fighting the menace of terrorism, for our and our children’s safe TOMORROW.

8. Pakistan’s Foreign policy is excellent in theory, perhaps the best in the world. However, this policy should be implemented in its true letter and spirit, with core emphasis on PEACE particularly with its neighbours; and Foreign Policy thrust and motto of all our diplomats should be that any and every action in their embassy, must result in the economic benefit of the country. Foreign missions exceeding their allocated targets of investments and remittances should be lavishly rewarded with monetary benefits.

9. Initiate steps (by imposing economic emergency) to bring each and every economic activity under document. In China even road side vendors issues receipts for sales of minor items.

10. To attract huge world wide foreign exchange deposits from expatriate Pakistanis and foreigners, allow profit rate of 3% PA to be paid on half yearly basis, on Dollar and other specified foreign currency bank accounts in Pakistan. We should not forget that in 2013 Pakistan borrowed at 3% from the IMF and sold Eurobonds at 8.25%.

Pakistan Paindabad.