Foregone times
THE past, as they say, is a foreign country. It seems that the PML-N’s leadership has chosen to live there. Nawaz Sharif’s speech at the ceremony held this Tuesday to commemorate his re-election as party president seemed like a melancholic reminder of how much potential the seasoned politician has squandered in recent years. The occasion was meant to announce Mr Sharif’s return to business; instead, he seemed unable to let go of the past, which he ought to have realised by now he has no real power to change. His speech, like other speeches in recent months, dwelt at length on the injustices meted out to him seven years ago. He obsessed over people long gone, whom he blamed for spoiling his dreams of a more prosperous Pakistan. He also spoke extensively on a conspiracy allegedly hatched against him some 10 years ago by a military general in cahoots with his main rivals. But was the public listening?
It seems that Mr Sharif has missed the writing on the wall. His party has been in power for more than two years now, either directly or through its proxies. It is widely perceived that he has been running the show from behind the scenes: first via ‘remote control’ from London and then more directly from Lahore. The public expects a politician of his stature to have some kind of game plan to steer the nation out of the present crisis. It is jarring that Mr Sharif refuses to acknowledge this in his public messaging, nor does he share a vision for the future. Furthermore, Mr Sharif has conceded the moral high ground he took after his forced ouster in 2017 by so far tolerating an expanded role for the establishment in politics and governance. Will his resumption of control of the PML-N change that stance? Unlike his younger brother, the elder Sharif has traditionally sought more power and authority for the civilian government. If he asserts himself again, would this disturb the present equilibrium between the government and the powers that be? These are all questions that will invite much scrutiny of the role Mr Sharif is once again set to play as PML-N president. Lamenting the past won’t save Mr Sharif’s politics, but motivating the people and giving them hope may inspire renewed faith in his leadership. Is he capable of reinventing himself?
Published in Dawn, May 30th, 2024
Debt trap
PAKISTAN’S debt stock has grown exponentially in recent years. So have debt payments, putting pressure on the budget. With the government running an unsustainably high fiscal deficit that averaged 7.3pc of the economic output in the past five years, it is not surprising that the national debt has already surged to Rs78.9tr — including a domestic debt of Rs43.4tr and external loans of Rs32.9tr.
The country is in a debt trap where it must borrow more to pay back its existing debt — domestic and external loans both. It is thus only natural for annual debt payments to also spike. For example, the authorities had anticipated debt servicing to jump to Rs7.3tr or almost 58pc of the budgeted expenditure for the ongoing fiscal. However, according to a report, they have now revised these estimates to Rs8.3tr.
The finance ministry’s Mid-Year Budget Review Report for the outgoing year confirms these concerns. The report shows that the nation’s debt payments spiralled by more than 64pc to Rs4.2tr during the first six months to December, an increase attributable not only to the mounting stock of debt accumulated to finance the fiscal deficit but also to the surge in the cost of domestic debt because of a record-high interest rate of 22pc. The report says the expenditure on debt servicing during the six-month period far outpaced tax revenue growth, bringing “spending on development to zilch”.
In the report, the ministry has blamed elevated domestic interest rates for our growing debt servicing woes. With the government covering nearly 80pc of its fiscal deficit through commercial bank loans amid drying official foreign flows, the interest rates are of primary concern as domestic debt payments accounted for nearly 90pc of the total debt servicing costs during the first half of the fiscal. The cost of borrowing has proved to be a major shock for the entire economy, and not just for the government, as new private investment has come to a halt and growth has stagnated.
What the report doesn’t discuss are the reasons behind this debt trap. While the higher interest rates are a burden, the main challenge is the government’s failure to control its fiscal deficit that is forcing it to accumulate more debt every day. Indeed, a reduction in interest rates will provide relief but will not solve the issue of burgeoning deficit and debt accumulation.
The task before the government is to boost its tax-to-GDP ratio to the global average by taxing the economy’s untaxed and undertaxed sectors, as well as eliminating wasteful expenditure to cut the fiscal deficit to sustainable levels to minimise its borrowing requirements for financing the budget. Do the authorities realise this and are they moving in this direction? We will know once the budget is announced next month.
Published in Dawn, May 30th, 2024
Margalla fires
THE Margalla Hills — the sprawling 12,605-hectare national park — were once again engulfed in flames, with 15 fires breaking out simultaneously on Tuesday. After an intense eight-hour operation, involving over 200 firefighters and three helicopters, the fires were extinguished. The alarming nature of the incident prompted Interior Minister Mohsin Naqvi to order a probe and the registration of an FIR. The Margalla Hills endure a perilous fire season from April to June, with incidents often abating only with the arrival of the monsoon rains in July. This year, the frequency and intensity of the fires have been unprecedented. Just a day before this major incident, two significant fires were extinguished after a seven-hour effort. These recurring fires can be attributed to many different factors. Climate change has undoubtedly played a significant role, with rising temperatures creating drier conditions conducive to fires. Human negligence is another critical factor; careless disposal of cigarettes, unregulated barbecues, and the carrying of flammable materials by visitors have repeatedly sparked fires. Additionally, there are reports of disgruntled villagers, excluded from seasonal firefighting employment, deliberately setting fires as a form of protest.
Efforts by the Capital Development Authority and the Islamabad Wildlife Management Board have been commendable yet insufficient. The CDA’s recent hiring of over 400 local firefighters and establishment of 38 pickets demonstrates a proactive approach. However, the lack of coordination and persistent turf battles between the CDA and IWMB hinder efficient fire management. A unified command structure, as suggested by experts, is essential for an effective response. Moreover, stricter enforcement of regulations prohibiting barbecues, smoking, bonfires, burning and littering of garbage and plastic, the carrying of flammable items such as lighters, charcoal, matchsticks, bottles of petrol or kerosene oil, and cutting down of trees is sorely needed. With climate resilience, public cooperation, and inter-agency coordination, we can protect this natural heritage from further devastation.
Published in Dawn, May 30th, 2024