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Challenging times and a maiden visit to United States of America

Challenging times and a maiden visit to United States of AmericaChallenging times and a maiden visit to United States of America

It appears that as time goes by, the challenges being faced by the Government of Imran Khan keep getting worse. When PTI took over the reins of the country, there were elaborate plans to bolster the economy and to overhaul the bureaucracy of Pakistan among other objectives, but it seems, they only proved to be a far cry. After two mini-budgets by Finance Minister Asad Umer, the required target to plug the fiscal deficit and negative balance of payment could not be controlled. Asad Umer was finally removed from office. Indecision was observed in approaching the IMF for a bail out. Call it inexperience, or just plain mishandling by the finance team, after considerable lost time and damage, Pakistan formally sought the 13th bail out package from IMF since the 1980s. On a separate front, efforts of the Commerce Ministry failed to address the plummeting exports. The balance of payment became alarming. Export regimes and the tax benefit to commercial and industrial concerns backlashed. The drop in exports during PTI Government has been more than in any other regime. Hand in hand with the drop in exports, was flight of capital and negative trend in the valuation of the Rupee. The currency of Pakistan lost more than 30% of its worth against the Dollar. It seems “something is rotten in the state of Denmark”, after all.

As a result of all the discouraging figures of the economy, and the back firing of policies, the Government had to submit to all the stringent regulations of the IMF for a 5.8 bn Dollar package to keep the economy running. The IMF directed the Government to launch an emergency economic plan to bolster tax revenues and to plug the fiscal deficit through direct and indirect taxes, alongwith cancellation of major subsidies and relief packages for the public. After Asad Umer, Hammad Azhar was also removed from the post of Minister for Revenue and Mr. Shabbar Zaidi, a Chartered Accountant from the private sector, was made Chairman Federal Board of Revenue. Mr. Zaidi implemented a detailed agenda in consultation with related ministries to increase the tax base through aggressive means. In numbers, it has been observed that only one percent of the population actually pays direct taxes. Commercial traders, retailers and shop-keepers in Balochistan and KPK, either don’t pay taxes at all, or are engaging in flagrant smuggling from the border areas. With-holding tax has been introduced in many areas to increase the tax net. This includes, buying of cards, purchasing supplies for business, international travelling, bank transactions, property dealings, etc. On the implementation of these reforms, the business community responded with an all-out retaliatory stance. Traders, shop-keepers and business associations in major cities of the country observed shutter-down strikes from 13th July. Industrial giants like Honda and Indus Motors (Toyota) have decided to shut down production.

Amid the chaos, the question emerges if PTI Government is in control or are they doing the opposite of that which is required? On a closer analysis, the old maxim holds true that the majority is always wrong. Pakistan has been running its financial framework on ideals of political point scoring instead of good governance. Unpopular decisions such as increasing the tax base, plugging smuggling and cutting superfluous expenditures have not been taken in the past. For the last 40 years, imports of luxury items have not been checked, which mounted the negative balance of payment in the first place. Construction projects and infrastructure expenditures were approved based on political constituencies (halka) instead of promoting a robust economic base. Medium and smaller traders were not brought in the tax net out of fear of backlash and reaction, ignoring that doing so will put undue burden on the salaried and marginalized section of the society. It is no surprise that on implementation of reform agenda to bring these thousands of business owners into the tax net is facing retaliation. The burden of tax must be shared by all, where it is due. The tax paying one percent population cannot run the country on its own. It seems that the nation has to face the hard truth, the leniency and inaction of the past cannot continue any further. The law of the land demands that everyone pay their due, as per law. Strikes and shutter-downs are a small price to pay for a better tomorrow and it is only through these rightful and lawful decisions, that a brighter future for coming generations will be possible.

On the International front, the PTI Government has fared better. In short, Pakistan and China have made considerable strides towards the realization of CPEC and One Belt and Road Project. Pakistan and its regional importance have doubled with the development of Gwadar as trading jewel of Asia. Both imports and exports are expected to rise through the port and the country’s national economy is to reap the benefits. Countries from across the globe have shown interest in the prospects of CPEC. Governments of both the countries are closely monitoring the progress. It is pertinent to mention that India is not to play any part in CPEC and One Belt and Road Project as the route of CPEC passes through disputed territory between China and India. Conversely, closer ties between Russia and China have improved potential of diplomatic progress for Pakistan. President Putin has already made a formal invitation to Imran Khan for an active role in the Russian Economic Forum. China and Russia have joined hands in One Belt and Road Project and multiple ventures are underway in their adjoining border areas for connectivity and diplomatic exchanges. In another progress, India was removed from the Afghanistan Peace Process while Pakistan is actively being engaged by the United States on a peaceful resolution of Afghanistan Taliban conflict. On 18th July, the International Court of Justice decided the case of Indian Intelligence Agent Kalbusan Jadav in favor of Pakistan. All evidence by Pakistan legal team presented to the Court in Hague was accepted. His sentence was sustained and it was decided that he is not to be released and his sentence is lawful. It is a diplomatic and legal victory for Pakistan over India. In another development, International Air space has been revived and all International Airlines are back in business in the country. In the same month, Imran Khan is making his first visit to the United States to meet Donald Trump.

Since Imran Khan and Donald Trump assumed office, ironically, they have been compared to each other time and again, both in humorous and social context. To point a few, both leaders have been known to be aggressive, both have raised nationalist agendas and propagated a no war policy, both are celebrities who became politicians with strained marital issues. Donald Trump has shown prudence in dealings with North Korea and Iran while Imran Khan has displayed restraint with India and Afghanistan. The Republicans want to show the congress that they still have Pakistan on their side in the Afghan solution while Pakistan intends to normalize the strained relations since 2017 and committing to the fact that Pakistan is doing its part in tackling terrorist outfits on its soil. The United States will be asked to alter its “Do More” strategy with Pakistan and maintaining a balanced posture when it comes to Pakistan-India conflict. It is clear that matters can only improve from here. Imran Khan is to present Donald Trump with a camel skin vase with his smiling face portrait on it, made in Multan. Hopefully, they will give their respective people, many reasons to smile on the day of the visit.