Daily Times

Prime Minister Imran Khan has taken Pakistan’s begging bowl to Saudi Arabia. That he did so while flying on a VVIP plane has led to criticism here at home; amid concerns that his austerity drive for public servants is over before it fully began. Indeed, the premier had promised that he would not engage in any foreign trips for the first three months of his tenure in order to stay home and fix the economy. But needs, as they say, must. And there are murmurings that the Saudis would not entertain his team unless and until Kaptaan himself put in a personal appearance. All the better to pinch the Iranians.

Be all of this as it may, it is hoped that the PM returns with the goods. Namely, a large ‘bailout’ loan to stem economic haemorrhaging. For the new set-up has repeatedly said that it considers an IMF package as the option of last resort. Though going by past records, it remains unclear if Pakistan would, in reality, be confronted with an ‘either or’ scenario. After all back in 2014, the country received a $1.5billion loan from Riyadh even as it was ploughing through IMF tranches.

Yet even if the Saudis or whomsoever end up coughing up, the Centre will have to outline a comprehensive plan of fiscal action. For it will not be enough to talk in vague terms; such as the need to shore up foreign exchange reserves or strengthening the rupee. Both the citizenry and big business have a right to know which industries will be invested in on a priority basis. As a first step, it is hoped that Pakistan’s IT sector will not lose out.

For last month the latter made history as exports in this field crossed the $1billion-mark for FY 2017-18; as confirmed by the State Bank of Pakistan (SBP). In fact, actual revenue surpasses even this amount to reach a staggering $3billion. This discrepancy is explained by export revenue appearing on the books of, say, the financial, automobile and health sectors. And then there is the matter of payment to freelancers falling under the domain of overseas remittances.

Thus export-targeted incentives introduced by the last government to protect the IT industry must be safeguarded and eventually built upon. These include: zero income tax on IT exports until June 2025; five percent cash remuneration on IT exports comparable with rewards for other sectors such as textiles, leather and sports; and access to commercial bank financing at preferential rates. This is not too much to ask. Not when the PTI government has initiated a major policy shift whereby non-taxpayers have been given the go-ahead to purchase brand new cars as well as real estate. Or when its annual tax collection target of Rs4.4 trillion falls far short of what is needed to fulfil its pre-election mandate of increasing this to Rs8 trillion over a five-year term.

It is therefore expected that the Khan cabinet will do the needful and handle the question of loans in an entirely transparent manner. While also rewarding competitive industries. For there can be no free lunches in Naya Pakistan.  *

Published in Daily Times, September 20^th 2018.