Daily Times

Imran Khan struggled for 22 years to get the most coveted seat of the Prime Minister without realising that it was not going to be a bed of roses. In the case of Pakistan, there are more thorns on those roses than petals.

His only mantra was against the corruption of the rulers and that once selected, he would get the money back from the culprits which is stashed abroad in hard cash and fixed assets. I remember my face-to-face meeting with him before the 2002 elections where a leading banker had invited him for a chat with a few friends to the Pearl Continental in Karachi. He was very excited about his luncheon meeting with General-President Pervez Musharraf and talked about it most of the time.

He said that it was an exclusive meeting where General Musharraf had invited him with his then wife Jemima Goldsmith and the lunch was also attended by Musharraf’s wife. He said that Musharraf liked his ideas and said that “You [Khan] and I can work together.” But, Musharraf had told Chaudhry Shujaat exactly the same as well.

Unlike the Chaudhrys, Imran did not have the capacity to attract electables. However, his party could win only one seat with the support of Musharraf. Once he was disappointed that he was not made the Prime Minister by Musharraf through political engineering, he turned against him. Otherwise, he didn’t care that he was going to be partners with a military dictator. Anyhow this time around, the political engineering worked and he was elected as Prime Minister.

To be charitable to Imran, perhaps one can say that he is well-meaning, but, as I said a few years back, he is politically naïve and doesn’t understand the complexities of the state craft. For instance, he believes that the two dams can be made through donations and that the economy can be brought back by getting the so-called looted money back from abroad.

He does not understand that running Pakistan is not the same as managing Shaukat Khanum Hospital. This is evident from the speeches he has made after being sworn-in, in his talk to the nation. He and his finance minister, Asad Umar, made tall claims that they would not borrow from the IMF, but within weeks they realised that the country will have to borrow not only from IMF, but from whatever other sources were available to keep the wheel of the economy going.

He can lay the blame on the Nawaz Sharif and Zardari governments for bringing the country to the economic brink and justify that he was left with no other option; but part of the blame has to be shared by him and the forces who backed him to destabilise the Nawaz government from the very beginning.

To make the people believe that they are not doing all this as a result of IMF’s conditions, the new government has already devalued the currency and raised the tariff for oil and gas. However, there are some good side effects of these tough measures. The currency devaluation goes in the favour of exports, which have been almost stagnant

IMF’s conditions are going to be tough. They have already pointed out that to stabilise and bring the economy to a sustainable level, Pakistan will have to devalue its currency against the dollar, withdraw subsidies on oil and gas and raise the interest rate to keep consumption under control. At the same time, they want Pakistan to almost double its revenue income. According to its own estimates, such measures will lead to 14-15 percent inflation. Already, the shine of Naya Pakistan is wearing off as prices of essential commodities are rising for which the common man blames the new government, which has been in office hardly for two months.

To make the people believe that they are not doing all this as a result of IMF’s conditions, the new government has already devalued the currency and raised the tariff for oil and gas. However, there are some good side effects of these tough measures. The currency devaluation goes in the favour of exports, which have been almost stagnant since the past few years. It may also increase the income from customs duty on the imports of the country, as it is laid on an ad valorem basis. Similarly, the rise in petroleum prices and electricity and gas charges will help to increase the revenue as the bulk of these prices include the heavy burden of taxes.

The PTI government is moaning about the burden of circular debt which has risen over Rs 1 trillion. This issue cannot be solved unless some structural reforms are made; the primary being privatisation of distribution companies (DISCOs).

The whole idea of de-bundling the power sector was so that the DISCOs, power generation companies and the NTDC are separated at the same time. This was done to privatise these companies so that they get profit instead of losing 30-40 percent revenue in transmission and distribution of electricity.

Interestingly, the Pakistan Peoples Party, which now opposes privatisation, also started privatisation of power generation and power distribution companies under the guidance of Benazir Bhutto. Kot Addu, which was Wapda’s main power generation company, was privatised in spite of Wapda’s resistance. Work on preparing the Faisalabad Area Electricity Board for privatisation was also started during Benazir’s time. She was the first one to privatise shares of Pakistan Telecommunication as well. She was impressed by the Thatcher model of privatisation, in which shares of the public sector organisations, such as PTCL, were offered to people at a discounted rate. The idea was not only to attract foreign investors, but also common middle class investors to invest in PTCL’s shares.

Preference was given to the applications of buyers for 500 shares and less to spread the gain. The PTI government should learn from the measures taken by Benazir’s government in the 90s and put companies going in loss first on the privatization block. Unless this is not done, we cannot make these companies cut their power losses and improve the payment system. The circular debt will keep snowballing and the consumers who pay their bills will have to bear the cost of heavy losses of these DISCOs.

The same also applies to the two gas distribution companies which have not been able to keep a check on unaccounted gas. As a result of this, these two companies always go to Ogra and plead for an increase in gas rates. Again, consumers have to pay higher rates because of their laxity.

Unfortunately, Pakistan is a country where honest consumers and taxpayers have to pay because of the unscrupulous. However, hoping against hope, the people expect that this anomaly would be addressed to a certain extent in the Naya Pakistan. But for that, unpopular structural reforms have to be implemented.

The writer is the author of What’s wrong with Pakistan? And can be reached at ayazbabar@gmail.com

Published in Daily Times, October 21^st 2018.