May 132008

KARACHI: The decision of Pakistan Muslim League-Nawaz (PML-N) to opt out of the government has left independent economists and analysts thinking what would support an already dwindling economy.
Break-up of the coalition government, led by the Pakistan People’s Party (PPP), has come at a time when the country needed rulers with strong political will to take some tough decisions. With PML-N’s exit, a number of important portfolios will be vacant. Among them the finance ministry led by Ishaq Dar, commerce ministry headed by Shahid Khaqan Abbasi and petroleum ministry commanded by Khwaja Asif will be the worst sufferers.

In the next three days, the government is supposed to announce petroleum product prices for the next fortnight. The level of subsidies on oil has already mounted to the point where the national exchequer can bear no more burden. If passed on to the consumers like last month, who will be blamed?

“If not more, the economy is important as the judicial issue for the common people,” said Kaiser Bengali, a well-known economist. “Government cannot afford to lose even a day,” he said referring to macro-economic imbalances, which have assumed alarming proportions.

A trade deficit of more than $16 billion, power shortfall that has increased to 4,000 megawatts, inflation which is at 13-year high and investor sentiment battered by terrorist attacks are some of the pending issues needing immediate attention.

According to Saad bin Ahmed, a research analyst, in the short term the PPP will face administrative hitches as most of the important ministries like finance were held by PML-N leaders. “But I don’t see any major shift in policies, which have already been established like that for continuing privatisation.”

A number of working professionals, who spoke to The News, regretted the decision of PML-N. They said the problems facing a layman were too severe than the issue of reinstating judges. Moreover, in less than two month’s time, a new budget has to be prepared. Estimations for subsidies on oil, food and power have to be finalised. Sources for funding the fiscal deficit, which is expected to be huge, are to be arranged. New avenue for raising taxes were to be decided.

But now with PML-N out of cabinet, how far the existing government will go in taking the difficult decision of taxing the rich remains to be seen. “One time meal is more important for a daily wager than any judicial issue,” said Sabeen Khan, a banker. “Improvement in economy could help address social ills automatically. With increase in income, people won’t commit suicide and young man won’t resort to crime. That is where the immediate focus should be.

Source: The News, 13/5/2008

 Posted by at 7:07 am

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