Daily Times

It seems the government’s financial gurus haven’t heard the old adage, ‘Don’t count your chickens before they hatch’. Adviser to the Prime Minister on Finance Hafeez Shaikh says the government will generate more than Rs1,000 billion in non-tax revenue in the coming year. The breakup of the targeted figures, however, shows that the cash is on the way but the flow is one time. At the end of the day, we will be relying on continuous cash flows in the shape of a strong tax collection mechanism that is only possible when the country has a strong tax culture. The one-time cash flow is expected from the renewal of telecom companies’ licenses and privatisation of re-gasified liquefied natural gas plants. The government has received Rs70 billion in terms of renewal of cellular licences from Jazz and Telenor while another tranche of Rs70 billion from the same companies and as much from Zong – Rs210 billion altogether – will be added to the exchequer. The privatisation of re-gasified liquefied natural gas plants in the coming months will generate another Rs300 billion in the next three months, if ” … our exchange rate remains stable,” the minister added.

We wish for the smooth execution of these plans as the money generated from the non-tax revenue measures will be spent on debt servicing and public welfare projects. Prayers are needed for privatisation for it has not been too successful in our part of the world. It is often a slow, conspiracy-infested, litigation-laden and staff-resisted process. Several sick units continue bleeding all over the economic outlook. The adviser on finance, however, seems determined to either revive the performance of institutions or privatise them. If his plans are realised then sick public sector organisations should be handed over to the private sector in a transparent manner. Privatisation of the sick units is only possible if indicators of ‘ease of doing business’ are improved and new companies are offered a level playing field. The minister also unveiled ‘Sarmaya Pakistan’, a new organisation to activate 20 companies through restructuring. Similarly, he put electricity distribution companies, National Bank of Pakistan and State Life Insurance on notice for privatisation.

The privatisation and restructuring plans are laudable but the point where the government really deserves our appreciation is its efforts to revamp tax collection. This is where its actions (read results) speak louder than words. In July and August this year, it collected Rs580 billion, which is up by Rs70 billion from the corresponding period last year. *