- Satisfying another IMF demand?
Perhaps the most glaring aspect of PM’s Finance Adviser Dr Abdul Hafeez Sheikh’s press conference on Saturday was his putting a figure on the government’s revenue target, Rs5.5 trillion. While Dr Sheikh expressed confidence in the FBR Chairman, Shabbar Zaidi, brought in from the private sector almost at the same time as Dr Sheikh himself joined the government, the failure of the FBR to meet even this year’s target, with collection at Rs3.83 trillion up to March virtually the same as the previous year’s Rs3.53 trillion for the same period, makes the target seem more like a figure generated to fill some IMF requirement, rather than a realistic expectation.
There have already been loud complaints at the squeeze the government has made to satisfy the IMF, but Dr Sheikh also made it clear that an austerity budget was coming, one in which gas, power and petrol prices would be increased, presumably by further taxation, as well as a hike in interest rates. That would confirm the widespread fears of a mass of taxes that would target the common man, already groaning under the burden of the measures the government has taken to satisfy the IMF. The Fund does not now impose conditions for a programme; it makes the government take measures in advance, and then approves a programme. This time, it has not even approved the programme for Pakistan yet. Dr Sheikh’s saying that the loan was obtained at a low interest rate is thus simplistic, because the IMF programme causes suffering, and that suffering has a quantifiable cost, which should be added while calculating the cost of the programme.
It is presumably significant that Dr Sheikh said that the civilian and military leaderships were on the same page about the need for austerity. Is Dr Sheikh talking about some sort of cut in military expenditure, which previous governments have resisted? This will be fiercely debated, because the country is just coming off a war-scare which led to the ramping up of military expenditure. Defenders of the military also argue that the multilateral financial institutions, including the IMF, have long wanted cuts in military spending, which would allow India a decisive advantage. It is to be seen if the government is ready, to grasp that particular nettle.