Interpreting Greek

Publisher and Managing Editor IKRAM SEHGAL  wrote this article for THE NATION which the DJ is re-producing with thanks.

As we go the final stretch into the next Federal Budget the economic indicators are not good, certainly not for want of trying on the part of the government. A whole range of factors beyond the control of our rulers have taken its toll on the economic situation, making it  from bad to worse, with only a very faint glimmer that things will improve. Moreover, while revenue collection may have shown improvement, what was needed was a dramatic rise. Electricity has registered a price increase, another hike is definitely on the cards pre-budget. And though to their credit, the government has made a token decrease in fuel prices, the bad news from OPEC is that they intend to decrease production to keep oil prices at between US$ 22 to 27 per barrel, triggering an upward revision in the near future, definitely again pre-budget. And post-budget we all know what happens, every Federal Finance Minister in recent memory has been forced to resort to what is termed as “mini-budgets” to cover the widening revenue deficits.

The major dynamo of any economy, a vibrant consumer- hungry middle class has had the stuffing knocked out of it by spiralling prices. So much of the population has moved below the poverty line in the past few years that while the middle class has not become extinct yet, they are definitely an endangered species. No wonder, our national savings are at an abysmal 13%, it is the middle class that fuelled the consumer economy and then put away something besides for a rainy day.  Given that any developing country has to be nearer the 22% savings rate to keep an even keel, we are forced to  borrow money from external sources to meet this gap viz (1) to repay our debts, particularly retiring the more-expensive ones and (2) to bridge the existing adverse budgeting gap.  Since we are looking for an inexpensive credit, in return IMF and World Bank demand their pound of flesh. Technocrats can give solace to the world financial institutions but only by ignoring the impoverished millions.  With widespread rains in the Punjab, NWFP and the mountains, the much-needed water increased the moisture level of the wheat crop in the irrigated areas when it was badly needed just before harvesting, but in many rain-fed areas the wheat crop has been badly affected. The rains did feed the two main reservoirs of Tarbela and Mangla, even so the sceptre of drought has not faded. 

A couple of private banks have come to grief, this “market correction” has been due to bad management coupled with outright fraud. The State Bank of Pakistan (SBP)  has played it really cool and prevented them from going under, allowing due process of the regulations in place to take its course, this lack of panic is a sign of great maturity. However, some people from SBP must have helped these crooks escape detection over the years. What SBP now needs is not only internal re-structuring  but fumigating itself of the “crony interests” within SBP, collaborators in the scams perpetuated by a handful of unscrupulous private bank owners. SBP should make an example of all those involved in cheating the depositors of their money. The nationalized commercial banks (NCBs) as well as the private banks continue to generally perform well, a holdover of one of the bright spots of the Mian Nawaz Sharif regime.

Though, prices of consumer items and  commodities have not yet gone past the fail-safe point of being within the reach of the common man, the market shelves are well stocked, unfortunately only a significant minority continues to have unrestricted buying power. This economic imbalance along with growing unemployment could well lead to social upheaval. This regime has arrested the rapid economic decline but done nothing spectacular. To be fair, even maintaining the status quo going is an achievement, however in the larger context simply good management is not good enough, what is needed is an extraordinary effort, mostly in revenue gathering.  We are sinking deeper into financial oblivion, immersed hopelessly in individual and collective economic despondency. Only the induction of risk-oriented entrepreneurs in government can break the country’s economic shackles.  

Military regimes usually go astray when they violate any of the fundamental principles of good governance, prime being that military men should not try and do jobs they are not trained for. You cannot throw Brigadiers at every problem.  Credibility is the most important  principle to be adhered to,  you cannot be seen to be unfair and unjust, your word should be good. Armymen are notoriously susceptible to glib-talking specialists with an impressive command of statistics, most having no relevance whatsoever to ground reality. While they are dangerous, given PR capabilities they become lethal. When they throw in difficult economic terms, things become difficult. At the best of times and even under political governments the bureaucrats staffing the Ministries remain out of control of anybody because they speak financial language not easily understood by everyone. No uniformed person in the history of four military regimes has sat in on the evaluation and decision-making process in the Ministries of Finance and Commerce.  No Chief Martial Law Administrator (or Chief Executive in the new euphemism) has ever had immediate expert independent advice as to internal functioning of these two vital Ministries and as to how they have been performing, whether what they have been recommending is good for the country and  the people. The men in uniform have almost blindly accepted whatever the Ministries of Finance and Commerce recommend. And who do the Ministers listen to? Before they became Finance Ministers they sang a different tune to what  they invariably sing as incumbents.  Within hours of passing through the portals of the Finance Ministry they abandon their Dr. Jekyll face for Mr. Hyde’s. People like super bureaucrat Secretary General Moeen Afzal  who control them in a subtle manner are  not crooks, but he is simply a role model of the  class of technocrats who look to the international financial institutions rather than feel the anguish of the impoverished faces of our teeming masses. Our poor Finance Ministers (and Finance Ministers of any poor country who cannot improve the lot of the common man is poor) are virtual prisoners of the kingdom they are supposed to be absolute masters of. Summaries are prepared for them in such a way that to disagree with the Summaries would be tantamount to committing professional hari-kari publicly. To an extent Shaukat Aziz has tried to bring in outside advice, but they are at best a “lunch and dinner club” with the odd suggestion accepted by the bureaucrats to keep them happy.

For the Chief Executive, expert immediate advice is even more important. To most military men, Finance is as good as understanding Greek, so why not get some “Greek” interpreters,  maybe couple of commercial bankers, an economist or two and at least two entrepreneurs in a CE’s economic “think tank”. He should perhaps raid the” Economy Advisory Board” larder for advisors. Such people could explain street economics to the soldiers in the language they understand to make them  fully aware of a subject that would normally be Greek to them. A few days ago I watched the CE intently as he spoke for over 3 hours to a select audience in HQ 5 Corps auditorium in Karachi. One thing was very clear, the CE sincerely believed in what he was saying about the economy, this  man was convinced about the statistics being dished out and the scenario being painted for him.  Unfortunately, what he was saying was not really the situation as understood by the entrepreneurs and others present in that room. The CE happens to be a sharp person and certainly not gullible, there can only be one assumption, he is fed information doctored specifically to make it sound rosy, and more importantly, believable. The Army’s senior executives are taught to  base their decision-making on the information available and assumptions thereof, for technical advice they turn to their “technical” advisors e.g. the Commanders Artillery, Armour, Engineers, Ordnance, Supply, Medical Corps etc who  advise the Divisional or Corps Commander (as the case may be) about their respective disciplines, both in peace and war. Ultimately the Commander makes up his own mind, the advisors advise only,  they do not (and cannot) dictate what the Commander will do.

One can be accused of being rather simplistic and crude in putting this point across but the bleak economic future is a harsh reality for the common man and this could lead eventually to economic apocalypse and anarchy. One must get the message through to our well-meaning soldiers in the language they understand. This military regime, at least in the upper hierarchy, has proven to be honest and upright but that is not enough for the hapless millions who expect them to  bring about a miracle to somehow better their lot. Governance has its perks but along with the perks comes an immense responsibility to try and fulfil the aspirations of the masses who have placed their trust and faith in them.