A positive break from the past
Finance Minister Asad Umar has spoken out clearly on two important issues currently being faced by Pakistan. One is addressing FATF’s concerns, the other arranging $9 billion to run the country. Umar says he has tentative solutions which he would lay out before Parliament within a fortnight. What is significant, he is keen to seek inputs from the parliamentary opposition to make improvements in his proposals. Dealing with what many consider an emerging financial crisis it is imperative to hammer out a national consensus.
Not living in an ivory tower, Umar rightly believes that it is in Pakistan’s own interest to address the deficiencies identified by the FATF. He views the issue as more of an opportunity than a challenge. The Finance Minister believes there is no reason not to remove the 27 deficiencies pointed out by the Task Force within the available timeframe. The government needs to realize that there are problems that need to be resolved first. ‘Hawala’ businesses and terror financing continue to flourish because certain influential circles have a soft corner for a particular variety of proscribed networks. One hopes Umar will be able to persuade those who matter that it is no more possible to continue the policy for it could exacerbate the country’s financial problems.
Some would argue that Umar was being over-optimistic by hoping that the root cause of the country’s financial woes could be eradicated within two to three years. For this the government will have to improve the working of the FBR, expand the tax net considerably, revive industry, make agriculture more value oriented and enhance exports.
Short term measures to improve the financial position include seeking loans from friendly countries and the Islamic Development Bank. There is a perception that finances thus collected would still fall short of the target, forcing the government to take resort to IMF. Opposition from the US could either lead the Fund to refuse the request or impose conditionalities that could have a destabilizing impact on Pakistani society and democracy. Taking the opposition along is therefore a national responsibility. For this the government has to take measures to reduce tensions with the opposition.