16.06.2013 An austere beginning
Austerity measures and drastic action against corrupt practices can ensure good governance and economic revival
By Alauddin Masood
With the swearing in ministers, at the national as well as at the provincial level, the process of transition from one civilian government to another has almost been completed. Elections for the Presidency will be held when the incumbent completes his tenure in September, this year.
Pakistan’s first ever orderly completion of the democratic process, foiling designs of vested interests to derail democracy, marks an important milestone in the country’s chequered political history. This first transition, under the auspices of a civilian government, has been widely acclaimed both within the country and abroad.
The vested interests, it may be recalled, had fielded an articulate religious scholar as their opening batsman to pave the way for the formation of a non-democratic government comprising technocrats, at least for three years to begin with. But, the masses did not lend support to those elements, paving the way for the May 11 general elections and transition to a new civilian government in keeping with the provisions of the Constitution.
In messages of congratulations to the newly-elected prime minister, the world community has hailed the democratic transition and extended hand of cooperation to the new democratic set-up. The UN Secretary General Ban Ki-moon has expressed the confidence that under the leadership of Mian Nawaz Sharif, Pakistan would build up on its democratic achievements.
Mian Nawaz Sharif, in his maiden speech after election as the country’s prime minister, asked the MNAs to make the National Assembly “the fortress to safeguard the democratic order.”
Listing some of the major challenges, including power shortfall, economic meltdown and precarious law and order situation, the PM said, he would not portray any rosy picture to the people, but he won’t disappoint them either, pledging to sincerely put in efforts for the resolution of these lingering issues. He visualised a prosperous Pakistan in days ahead and announced zero tolerance for corruption and pledged to make all appointments purely on merit.
Giving broad contours of the PML-N’s plan for the first 100 days in office, Nawaz Sharif said that they would assign priority to rebuilding basic infrastructure with focus on boosting agriculture and industrial sectors, while work on overcoming the energy crisis has already been put in motion. While the country faced an acute energy shortfall, two stalwarts of the previous PPP regime — Law Minister Babar Awan and Law Secretary Masood Chishti — during their tenure allegedly delayed approval for the shifting of Nandipur and Chicho Ki Malian power plants’ machinery from the Karachi port to the site.
Law Ministry’s Senior Joint Secretary, Dr. Riaz Mehmood, made the startling disclosure before the Supreme Court on June 10, 2013. How unfortunate – rather criminal – that state minions whose job should have been to facilitate installation of new power houses have been creating obstacles even during times when the country was experiencing a deepening shortfall of energy, impelling some industrialists to relocate their factories to other countries?
This brings to the fore the need for curtailing the role of the bureaucracy to the minimum as far as new investment in the country is concerned. Without taking drastic steps, it might not be possible to curtail the scourge of corruption.
Referring to his meeting with the Chinese PM, Nawaz said they had planned to lay a rail track from Kashgar to Gawadar and Karachi. He said that his party was doing the politics of values and that was why they respected the PTI mandate to form the government in Khyber Pakhtunkhwa (KP). In the same spirit, he said, for the first time in the country, a majority party has doled out the slots of CM and Governor to its smaller partners in Balochistan.
The citizens are confident that, under Nawaz Sharif, Pakistan would not only come out of the present economic morass, the country would also start making economic progress, once again. In support, one may refer to the signs of turnaround in the crippled and debt-trapped economy of Pakistan immediately after the PML-N’s electoral victory. The five key economic indicators — stock market, real estate, foreign exchange reserves, dollar-rupee parity and inflow of foreign investment — are showing signs of recovery. According to analysts, these five factors are the foremost economic indicators that show immediate response to economic change: If the economy progresses these indicators rise and if the case is otherwise they start regressing.
The Karachi Stock Exchange benchmark-100 index is setting new records every week. It surged to a record high mark of 22,358.96 points on June 7, 2013 when market capitalisation ballooned to 5.39 trillion rupees from 4.75 trillion rupees in early May, indicating an increase of over 650 billion rupees. Analysts described it as a good omen for the economic revival. While before elections, people were talking about default and economic failure, after the PML-N’s electoral victory they are now talking about economic revival and growth. They cite the inflow of foreign investment as one of the key indicators of economic growth.
After stock exchange, real estate is the second key indicator that immediately reacts to the economic turnaround. In the last two months, the real estate prices, in posh areas, have increased by 10-25 per cent, depending on the property’s location. Similarly, the foreign exchange reserves that were constantly showing downslide before elections have started registering improvement beginning in the third week of May, 2013.
On May 17, the State Bank of Pakistan reported a slight decline in foreign exchange reserves, from US$11.60 billion to US$11.43 billion. However, the situation changed by May 24, 2013, when the SBP reported reserves at US$11.62 billion, from 11.43 billion dollars of the preceding week, showing US$190 million growth despite US$390 million payment to the IMF as loan installment.
Since the flight of capital has stopped and inflow of foreign investment has started increasing, this trend would strengthen the foreign exchange reserves and the value of Pakistani currency against major currencies of the world. Dollar-rupee parity that had crossed 100 rupee mark before elections has reversed to below 100 and it is now hovering around 98.50 to 99 rupees. It is believed that improvement in investment and reserves would further squeeze the value of dollar against the rupee in the coming weeks.
Meanwhile, the country’s new leaders, it seems, have started proceeding on a course of austerity. To begin with, the PM has trimmed the size of the cabinet of ministers. Against six dozen ministers in the cabinet of the outgoing PPP government, Nawaz has constituted a cabinet of 25, including 16 ministers and nine ministers of state. In addition, he has appointed three advisors and two special assistants to the prime minister.
A ministerial slot, on an average, costs about 12 million rupees annually. This means a saving of about 500 million rupees. Furthermore, the number of ministries has also been slashed, which would result in considerable savings. To curtail administrative expenditure, the new PM has also directed a reduction of 30 per cent in the staff of the PM’s office. On June 10, he advised the members of his cabinet to reduce all non-development expenditure by at least 30 per cent.
Furthermore, corresponding to every ministry, there are committees both in the Senate and the National Assembly. A reduction in the number of ministries would automatically result in the curtailment of the number of parliamentary committees and their chairmen, who enjoy perks and privileges equal to that of a minister of state. In addition, there is a parliamentary secretary for every ministry and reduction in the size of the ministries would mean corresponding decrease in the number of parliamentary secretaries.
As the number of ministers, federal ministries, committee chairmen and parliamentary secretaries decrease, so would the need for providing them limousines. The cumulative effect of rightsizing the cabinet, the parliamentary committees, committee chairmen, parliamentary secretaries and various ministries/departments would result in savings of billions of rupees. Only a popularly elected leader could have taken such bold and drastic steps!
Taking a cue from the helmsman, leaders at the federal and provincial level have also announced to adopt austerity. The PML-N government has reportedly decided to abolish the multi-billion rupee discretionary development funds for the prime minister and also impose ban on the import of luxury Mercedes cars in the budget for 2013-14.
The PM’s discretionary development fund had swollen to a whopping Rs42 billion under ex-PM Raja Pervaiz Ashraf. Federal Information Minister Pervez Rasheed, Chief Minister KP Pervez Khattak and Chief Minister Balochistan Dr. Abdul Malik have expressed their determination not to use secret funds at the initial stages of their new tenures. Interior Minister Ch. Nisar Ali Khan has announced not to use the official car, the official helicopter or aircraft of the Interior Ministry.
These austerity measures are bound to show results, in the shape of accelerated growth, in due course of time.
The writer is a freelance columnist based at Islamabad. alauddinmasood@gmail.com