When Mr Moeen Qureshi took charge as prime minister last month, the economy was in a royal mess, thanks in particular to Mian Nawaz Sharif’s cavalier management methods and pet-patronage-projects over the past 30 months. The fiscal deficit was running at over 10 per cent of GNP, the growth rate of the economy had fallen from over 6% to 3% (the lowest in three decades), foreign exchange reserves were down to less than two weeks’ import bill ($300 million) and debt payments at a whalloping Rs 40 billion a year were 33% of budgetary revenues. More alarmingly, the government was on the verge of defaulting on its foreign debt because donors had refused to infuse fresh credits or grants into the economy.
Now Mr Qureshi has launched a socio-economic package which promises to usher in a small revolution if it is successfully implemented. Doubting Thomases and self-righteous cynics aside, there is no reason to disbelieve Mr Qureshi’s noble intentions. He is aiming to squeeze desperately needed revenues out of chronic tax evaders and to bar scores of grubby politicians from contesting the next elections. Who can honestly disagree with this agenda?
Ironically, though, the most sweeping economic measure is a small tax on agricultural incomes and wealth on farms above 60 acres (only 1.5% of the total number of farms). This is expected to yield Rs 10 billion ($350 million) every year on the heroic assumption that there will be no leakages. A piddling sum, true, even if it works, but a revolutionary step all the same — since independence in 1947, the powerful feudal lobbies which have dominated every civil or military government in the country have fiercely resisted any form of tax on their wealth. A small step for man, a giant leap for mankind.
Mr Qureshi is also targeting other rich people who don’t pay their dues. All rural and urban properties will be re-assessed at current market prices so that wealth taxes reflect the true worth of assets rather than values established over two decades ago. Although Pakistan nourishes a sprawling underground economy estimated at about Rs750 billion (only 0.1 % of all Pakistanis pay any tax at all and about Rs 100 billion are evaded every year), no one has ever gone to prison for evading taxes. No more, says Mr Qureshi, who is threatening to bung tax dodgers into the clink.
On the political front, equally far reaching reforms are afoot. Stringent laws to bar crooks from contesting the next elections have been announced. This category includes those who have defaulted on bank loans or used political clout to have their loans written off. Tax evaders and drug traffickers are also on the hit list, with the death penalty now prescribed for drug pedlars.
According to reports, about 300 former members of the national and provincial assemblies, mostly feudal politicians, owe about Rs 23 billion to various state-owned financial institutions. Many among these gentlemen have defaulted on payments. In addition, about Rs 10 billion in debt is said to have been written off in the past decade. On this basis, scores of current electoral candidates, especially from the two main political parties — the PPP and the PML — face disqualification next month.
There’s more to come. Mr Qureshi is now framing rules to ensure that future prime ministers or provincial chief ministers do not misuse their discretionary powers to grant thousands of plots of state owned urban land worth billions at a fraction of market prices to political cronies and favourites as they have done in the past. The worst offenders on this count have been Mr Sharif and his henchman Mr Wyne, although Mr Junejo, Ms Bhutto, Mr Jatoi, Jam Sadiq Ali and Mr Muzaffar Shah have vied equally for such dubious honours. Justice Tiwana of the Lahore High Court is taking a damned good look at all such allotments since 1985 and we expect he will do his duty by his country and force hundreds of undeserving recipients to return the plots back to the state.
Corrupt civil servants and police officers are also in the firing line. A commission under Justice (retd) Samdani, whose reputation for no-nonsense precedes him, has been established to weed them out in the next six weeks. Hundreds of high and low bureaucrats have already been transferred across the country so that they can’t tamper with the election process now underway. Another task force under an army general is expected to sweep drug infected regions, especially in the North West Frontier and Balochistan provinces which produce over 200 tonnes of opium every year, and arrest known drug traffickers.
Understandably, the rich and powerful are angry and fearful. Some politicians, especially from Mr Sharif’s camp, are claiming that Mr Qureshi’s caretaker government doesn’t have the “mandate” to enforce such sweeping changes. Give such people a miss, we say. Having screwed up their own mandate, they’re no one to talk about it anymore.
Some businessmen are also accusing the government of kowtowing to the IMF and World Bank. We hear this sort of rubbish at budget time every year. We all know that there’s plenty wrong with us without bringing the World Bank or the IMF into the debate. Having lived off the fat of the land and gobbled up foreign aid all these decades, it’s time these bleaters belted up and forked over.
Mr Qureshi’s recipe for increasing revenues, however, could also hurt the urban lower-income brackets. Wheat and edible oil prices are up 15% while charges for electricity, gas, petrol, water and phone calls have risen by another 10%, the second time in three months. This was probably unavoidable. What is avoidable, however, is the secondary round of price rises on a range of goods affected by greedy traders and businessmen determined to maintain their huge profit margins. Maybe, it’s time Mr Qureshi beefed up the Monopolies and Prices Commission to keep such profiteers in check.
Nonetheless, ordinary Pakistanis are absolutely thrilled. At times like these, a dose of inflation is a small sacrifice to make for such lofty long-term goals. The country can finally boast of a prime minister, even though he is an unelected caretaker, who has had the courage to pass such laws and may have the grit to make them stick. Most people are sick and tired of crooked politicians, despotic bureaucrats and filthy rich businessmen ruthlessly lining their nests at the public’s expense.
But what makes Mr Qureshi so sure that he’ll succeed where others have failed before him? Mr Qureshi’s strength flows from his team of retired army officers, judges and bureaucrats with a clean record of public service and no vested interests to grind. A sprinkling of scrupulous businessmen and professionals has also been thrown in for good measure.
More significantly, though, the caretaker government has the blessings of the army which, like the rest of us in the country, is thoroughly fed up with the shenanigans of deviant politicians. The generals have told the prime minister to put the country on the rails again and make sure that it stays that way. We’re prepared to buy that.
Of course, international donors are enthusiastic about the new reforms. Following Mr Qureshi’s announcement of the package on August 19th, the World Bank has swiftly committed $ 700 million in credits to help Pakistan out of its foreign exchange crunch. Another $ 2.1 billion will be forthcoming from the Aid to Pakistan Consortium next September. Too good to be true?
Some people in Pakistan think so. The suspicion is that when a new government is elected to power next October, it may roll back Mr Qureshi’s more radical reforms. Such cynicism may not be altogether misplaced. Although Benazir Bhutto has welcomed the reforms, there are grumblings in Nawaz Sharif’s camp. “The caretaker government doesn’t have the mandate to disqualify anyone from contesting the elections”, said Mr Ghaus Ali Shah, a former federal minister in Mr Sharif’s cabinet, “We may challenge this move in the courts”.
Go ahead Shahji, we say, try your luck with the courts. Somehow we don’t think they’ll even give you the time of the day. No judge can afford to ignore the mood of the country and still expect to remain honourable.
If the next government tries to roll back Mr Qureshi’s reforms, it will not get away with it. For too long we’ve been taken for a ride. No more, we say. Now we want good government and nothing short of that will do.
Meanwhile, we have only one word of advice for Mr Qureshi. Get on with it, Sir! Take a butcher’s knife and show no respite. We’re with you all the way. Hip Hip Hooray!