CM Bizenjo’s complaint
BALOCHISTAN Chief Minister Mir Abdul Qudoos Bizenjo’s claim that his province is facing a financial crunch due to a large shortfall in its share from the federal divisible tax pool is debatable. He told reporters on Wednesday that the federal government hadn’t disbursed even a tenth of the province’s share in the first quarter of the present fiscal year under the NFC award. However, the report on the federal fiscal operations during the period between July and September shows that Islamabad has already transferred nearly Rs83bn or a quarter of its estimated share from the tax pool. He has further contended that the federal government also owed Rs40bn to Balochistan in outstanding arrears on account of gas royalties, warning that his government would not be in a position to pay salaries to its employees if it didn’t get its full share under the NFC. Islamabad should clarify the exact situation regarding his claims to explain its position.
Mir Bizenjo’s concerns over the alleged shortfall in the NFC and straight transfers are understandable. His party’s lawmakers and others who helped topple his predecessor and crown him chief minister are apparently demanding their reward. In fact, all ruling parties in the provinces want to divert the maximum resources for development works to please the voters as the next general elections are not very far away. Unless called earlier, the elections are scheduled for next October, and the provincial governments are left with just seven months to complete development schemes before the parliamentary term ends. No wonder Mir Bizenjo’s administration, as stated by the CM, has already released Rs70bn for schemes under its annual development programme for the present year and wants more money to give the CM’s party legislators. On top of pressure from party lawmakers, he is also under pressure from the flood victims to help them in the rehabilitation process. How much help the cash-strapped federal government facing immense pressure from the IMF to cut its deficits can extend to Mir Bizenjo and the province is anybody’s guess.
Published in Dawn, December 3rd, 2022
Battle for spoils
THE spectacle playing out inside a London courtroom shines a light on the struggle for control of the assets of the once united MQM. Once an electoral behemoth in urban Sindh, the party today is faction-ridden and no longer the vote-getter it once was. Part of its popularity was based on a genuine, loyal vote bank, while much of it was the result of a violent, toxic politics enforced by the gun. The case in question involves seven or so properties located in upmarket parts of the British capital, reportedly worth over £10m, and was filed by Aminul Haque, currently a federal minister and leader of the MQM-Pakistan, the Bahadurabad-based faction that formed after the party split following Altaf Hussain’s 2016 controversial speech. It was after this episode that the establishment decided to clip the MQM’s wings. The MQM-P is apparently interested in gaining control of the expensive real estate for the benefit of “poor and needy people”, and the trial has brought the MQM founder face to face with his acolytes-turned-nemeses, as he tries to retain control over the properties. In a related matter, as reported exclusively in this paper, efforts were underway to reunite two of the factions of the MQM: Bahadurabad and Mustafa Kamal’s PSP, while the powers that be were also reportedly open to the idea of rehabilitating some London-based leaders.
Regarding the property matter, the UK courts can best decide the merits of the case. However, it beggars belief as to how a self-professed middle-class party was able to snap up some of the choicest real estate in London. Mr Hussain has said “ordinary workers” had given him the properties. Yet it is quite possible that the pricey real estate was purchased not through chanda (donations) but bhatta (extortion). During its nearly three-decade stranglehold over Karachi, the MQM had perfected the art of shaking down the citizens of this hapless city to fund its operations. Therefore, it must be asked how the MQM raised millions of pounds, and how the funds reached London. A legitimate money trail needs to be established. Where the reported political engineering is concerned, as the lately retired army chief indicated, the military has said adieu to interference in politics. We hope the new chief, with specific reference to urban Sindh, sticks to this position. An artificial, and indeed pliable, ‘dry-cleaned’ leadership should not be foisted upon Karachi. Let an organic, democratic leadership emerge from Pakistan’s biggest city.
Published in Dawn, December 3rd, 2022
Fleeting good news
THE last couple of days have seen some positive news. The Pakistan Bureau of Statistics reported that the nation’s trade deficit has shrunk by a whopping 30pc to $14.41bn during the first five months of the ongoing fiscal to November from $20.62bn a year ago.
Then the State Bank announced that Saudi Arabia had extended the term for $3bn in deposits through the Saudi Fund for Development to support Pakistan’s dwindling foreign exchange reserves, saying the move would help meet external sector challenges and achieve sustainable growth. But while these are welcome developments, they will provide only temporary support to the economy.
The reduction in the trade deficit is not due to a boost in exports — which face heavy headwinds due to the decrease in global demand amid inflation and elevated energy prices. It is a result of the central bank’s stringent controls on inbound shipments, which declined by over a fifth from last year.
With remittances experiencing a downturn because of the rising cost of living in the US and Europe, we have no choice but to hold down our import bill to somewhat ease the pressure on the current account, even if it means drastically slowing the economy. Likewise, the Saudi money is a loan we must return in a year if not extended again.
Indeed, there is no other option to get out of the economic mess we have created in the last few years. The problem is that we are not ready to learn from our blunders. When former finance minister Miftah Ismail reached an accord with the IMF after months of hard work for the resumption of its bailout programme, it was hoped the ruling alliance wouldn’t repeat the previous government’s mistakes.
Sadly, at a crucial time, Ishaq Dar, a big proponent of a strong rupee, was brought in to replace Mr Ismail to do the impossible: contain the devaluation of the exchange rate, reduce interest rates and tame inflation.
However, Mr Dar’s initial actions have produced the opposite of what was intended. The interbank exchange rate has remained range-bound for some weeks but the dollars have vanished from the market due to the expanding gap between the official and kerb market rates.
Inflation continues to rise and the State Bank was forced to raise interest rates under pressure from the IMF with its ninth programme review in limbo.
The gap between Islamabad and the lender over fiscal slippages continues to widen as the Fund has strong reservations over the finance ministry’s revenue and expenditure — especially flood-related spending — estimates. Consequently, other multilateral and bilateral donors are reluctant to disburse the promised dollars.
We have tried to delude the IMF multiple times in the last three years. Each time it has responded with more painful conditions. Now, unless we implement the required governance and financial reforms, sustainable economic stability will remain a pipe dream.
Published in Dawn, December 3rd, 2022