Dangerous territory
THE State Bank’s decision to increase its benchmark rate by 300bps to 20pc, the highest since 1996, was expected and is part of several other actions that the government has undertaken in the last two days to fulfil the promises it had made to the IMF for its loan but was reluctant to follow up on.
The government had set the stage for these actions during a briefing for journalists on Monday, during which some officials accused the IMF of moving the goalposts for Pakistan.
A day later, a surcharge on electricity bills was announced to finance the power-sector debt, as the SBP removed curbs on the exchange rate it had quietly reimposed after letting the rupee depreciate in January to pave the way for the IMF mission’s visit for restarting discussions on the stalled programme review.
These measures followed fiscal adjustments, including an increase in the standard consumption tax rate and excise duty, reduction in energy subsidies and cuts in government expenditure to meet the budget deficit target.
There seems to be some consensus that Pakistan cannot overcome its balance-of-payment crisis without IMF support. Yet ties with the Fund have deteriorated and the trust gap has widened ever since Ishaq Dar took the reins at the finance ministry.
Mr Dar continued to deviate from the programme path signed by his predecessor last summer. His overconfidence that he could secure enough financing from ‘friendly’ countries — enough to help the coalition through to the next elections — as a substitute for IMF dollars was misplaced. Not just that, he again digressed from the steps agreed with the IMF last month even before the staff-level agreement could be finalised.
Sadly, Mr Dar’s actions over the last five months have imposed a punishing cost on the people and the economy. Prices of goods and services have spiked by 31.5pc and are projected to surge further because of steep currency depreciation — the rupee lost over 9pc to the dollar in the interbank in the last two days — removal of subsidies and energy price adjustments, with little hope of let-up over the next couple of years. Factories are closing and jobs being lost. More industrial closures cannot be ruled out.
On the external front, the international rating agencies have downgraded Pakistan deeper into junk, with the nation’s dollar bondholders bracing for a potential default over dwindling reserves and scheduled debt payments. No one is willing to step up in a big way without the IMF on board.
As pointed out by the SBP, the early conclusion of the ongoing review under the IMF funding programme is critical to “address near-term external sector challenges”. But for that to happen the government and its chief finance manager will have to put aside their egos. They may have no other option.
Published in Dawn, March 3rd, 2023
Fresh head count
THE Seventh Housing and Population Census physically got underway on Wednesday at a time when the nation faces multiple crises. Yet in order to plan for a better future, this crucial exercise needs to be conducted in a transparent and credible fashion, to avoid the serious questions that arose about the accuracy of the 2017 head count. Enumerators have begun to fan out across Pakistan, while the drive to encourage self-enumeration (to save time) on the dedicated PBS portal had begun several days ago. The main feature of this exercise is that it is being dubbed the country’s first ‘digital census’, thanks to the use of technology to record data. Surely, if technology, such as the tablets the enumerators are carrying with them, is used to its fullest potential, many of the lacunae of past counts — intentional or otherwise — can be addressed to produce a more accurate picture of the nation’s current demographic trends.
Population counts were held with regularity, every decade or so, until the 1981 census. However, the fifth and sixth censuses were held after unacceptably wide gaps. On the other hand, the current exercise is being held earlier than scheduled, considering the quantum of complaints regarding the 2017 head count. The main point is that this multibillion-rupee exercise, costing thousands of man hours, must be a credible one and not fall prey to controversy of any kind. Unless there is accurate demographic data, everything from resource distribution to allocation of seats in the legislatures becomes skewed. For example, in the 2017 count, there were concerns that areas of urban Sindh were undercounted. Many independent experts have concurred that there was an undercount of urban areas. Considering the trend of rural-urban migration, it is essential that the PBS comes up with the right numbers this time. There have also been issues with the portal itself. If people are having trouble trying to register their particulars on the first digital census’s official portal, it may not inspire confidence about the future. But if reliable data is captured in real time, and technology is harnessed to help analyse and sort this data, complaints of malfeasance can be suitably addressed. Political parties, civil society, and most of all the people of Pakistan need to be assured that the count will be fair, and help pave the way for a better planned future.
Published in Dawn, March 3rd, 2023
Monsters amongst us
ANOTHER crime of bestial violence against a child has taken place, this time in Karachi. On Wednesday, a six-year-old was found brutally raped and murdered after she went missing three days ago. The child had been subjected to horrific sexual violence, possibly by more than one individual. An hours-long protest by her relatives and political workers was held on the National Highway and called off only when a senior police official assured them that all those responsible would be arrested. Two men, both neighbours of the victim, have been detained by the police for interrogation on information provided by witnesses.
There was a hue and cry after the January 2018 rape-murder of young Zainab Ansari in Kasur, a crime shocking enough to shake society out of its apathy and encourage some soul-searching. What had we become that the most vulnerable amongst us could be targeted in this manner and her life snuffed out so cruelly? There were also of course inevitable calls for hanging the perpetrator publicly, something that a civilised polity cannot possibly countenance. When the police zeroed in on the killer, DNA evidence established that he had earlier killed at least seven other children, indicating that the police did their job properly only after public pressure came to bear on them following Zainab’s murder. That crime became the catalyst for the Zainab Alert, Response and Recovery Act, which enhances the punishment for offenders and aims to coordinate efforts to trace the victims. It also made it mandatory for the police to register an FIR for such a crime within two hours of it being brought to their notice. However, thus far little more than lip service has been paid to implementing the law. It is only when the police investigate each case thoroughly, when legislators ensure the law is applied, and a sex offenders’ registry is set up, that we can take paedophiles off the streets and keep our children safe.
Published in Dawn, March 3rd, 2023