According to media reports, the Taliban claimed responsibility of last month’s church bombing in Peshawar – the deadliest attack on Christians in Pakistan so far and the most recent in a series of attacks on religious minorities.
The Taliban have set up a new faction, Jundul Hafsa, to kill foreigners to avenge US drone strikes on Taliban and Al Qaeda operatives in Pakistan’s tribal areas. The group said they would continue to strike foreigners and non-Muslims.
The suicide bomb attack on Peshawar church sent a wave of shock and awe among people belonging to all sects across the country. Protests against the barbaric killing of the innocent men, women and children were launched across the length and breadth of Pakistan. The barbarism of the heartless killers has been condemned in the strongest terms by almost every segment of the Pakistani society.
If this is how the Taliban going to respond to Pakistan’s genuine desire to bring an end to the menace of terrorism through negotiations, Pakistan will be compelled to look into other options to deal with the issue.
M Fazal Elahi,
Dar economics – I
Prime Minister Nawaz Sharif must wake up and feel the pulse of the nation that voted him to power, instead of catering to the greed of tax defaulting traders, real estate businesses dominated by our corrupt bureaucracy, the land mafia and the black economy.
It is true that the PML-N inherited an economic nightmare with total debts escalating by another Rs8.2 trillion during the five years of the Zardari-led government. The PML-N volunteered to lead the country, with promises of economic welfare, justice and security for all.
The country and its people benefit only when the documented economy expands and the black economy shrinks. An IMF package was needed to evade default, but it was expected from the government to impose direct taxes on every citizen earning above a declared minimum limit.
If direct taxes were levied, in line with the demands of almost every donor agency, rise in fuel and electricity tariffs and the cost of essentials could have been curtailed. About 80% of the taxes in Pakistan are indirect, which include income tax levied through indirect taxation on utility bills, purchase of immovable items, and vehicle registration. There are no incentives or privileges for taxpayers.
The new government continues to facilitate the black economy, exempting real estate sales and stock exchange profits from taxes, and waiving off the requirement for an NIC and an NTN for retail traders.
Annual remittances of over $14 billion from expatriates – almost 85% of them coming from those who do not have dual nationalities – are siphoned off to foreign countries by this black economy.
Dar economics – II
The predictability of a country’s exchange rate movement can be very dangerous. It can shake the markets and disrupt the country’s entire economy.
Never in the history of financial markets has any government in the world made its currency exchange rate movement as predictable as our government did recently. And the prediction was in one direction: down, down and down.
Among other factors, the success of today’s financial markets is hidden in their unpredictability. All over the world, market players study a lot of economic fundamentals and political factors in an effort to forecast which way the markets might move, and then make their bets accordingly. In our case, the newly elected government has made the investors’ job very easy by indicating that the Pakistani rupee is going to weaken. This clear prediction can easily be derived from a document recently signed by the Government of Pakistan and the IMF, namely the recent bailout package of $6.7 billion.
As per the agreement, Pakistan will increase its foreign currency reserves by a hefty sum of $4.4 billion during the current fiscal year ending in June 2014, bringing them from the existing level of $5.162 billion to $9.562 billion.
Under the present circumstances, such a huge foreign investment or inflow is highly unlikely. The rupee was cracking back home in Pakistan’s forex market on September 27, when the country’s prime minister was in New York making a case with top Wall Street executives to invest in Pakistan. I believe Wall Street investors are smart enough to understand what the devaluation of Pakistan’s currency means to their potential investment in the country.
Therefore, in order to meet the IMF’s condition, the State Bank will most likely go to the interbank market to buy US dollars. Since there isn’t a sufficient supply of US dollars in the interbank market, the rupee will come under immense pressure. That is what the investors have been betting on in the forex market during the last few weeks. As a result, we saw the slaughtering of the Pakistani rupee during the week ending on September 27.
Although the rupee has already lost around 10% of its value in the last three months, investors are reportedly still liquidating their positions from the stock market and other financial markets and buying US dollars from open market because they appear to be convinced that the rupee is going to get weaker.
Analysts inside and outside the country are waiting to hear from the country’s finance minister as to what was the wisdom in taking an IMF loan with such a stern condition. Did he not know agreeing to buy such a huge amount of dollars from the market would ruin the value of the Pakistani rupee? I believe he has some explaining to do, to came the turbulence in the forex market.
Ejaz Ahmad Magoon,
Blame it on IMF
The IMF has become a perfect punching bag for tax defaulters, members of the powerful political elite, and the civil and khaki bureaucracy, who will never allow the economy to be documented because this would curtail institutionalized corruption and prevent the flight of capital from which they benefit. Terrorism thrives in Pakistan because the government machinery benefits by helping them evade laws.
What is wrong with the IMF asking the government to improve the tax to GDP ratio and bring it at part with the rest of the world? In most developed and developing countries, details about sources of income, assets owned by citizens, ownership of movable and immovable property, and criminal and immigration records are all documented and available for the state to look at. No person can operate a business, charitable organization, religious organization, or indulge in any legitimate activity or transfer funds without registering with the relevant state regulatory body.
The choice to levy direct taxes on all citizens earning more than a specified sum and use that money to cater to state obligations for health and education lies with individual countries. Pakistan can either choose to follow its constitution and universally accepted norms for good governance in letter and spirit, or protect the vested interest of certain individuals and groups.
If the Pakistani state has chosen to provide expensive real estate to its civil and military bureaucracy instead of helping the homeless, the IMF or the World Bank cannot be blamed.
It was not IMF that allowed old inefficient machinery to be imported for electricity generation, or for politicization of cheaper hydel generation. It was the bureaucracy and the sitting governments who preferred lucrative kickbacks up front during their tenures. We cannot blame IMF for not levying taxes on profits in real estate sales, or the stock exchange business, for the countries that control the IMF do levy such taxes on their own people.
For any self-respecting government, sarcastic statements by numerous foreign figures, such as former US Secretary of State Hillary Clinton, would have been enough to decide to impose direct taxes on the rich, instead of doing reverse and leading to massive inflation, unemployment, crime, and devaluation of its currency, and jeopardizing national security.
Killers of Karachi
Every day for last fifteen years, innocent residents of Karachi are being butchered by target killers, robbed on the streets, subjected to extortion, and kidnapped for ransom. The Supreme Court of Pakistan has held none other than the major political parties of this city responsible for patronizing criminal gangs engaged in organized crime.
Where in the world do law enforcement agencies seek permission from political parties to carry out raids against suspected criminals, when they themselves have been held responsible for harboring them? If rule of law is to be restored in Pakistan, then in the words of Roosevelt, “No man is above the law and no man is below it, nor do we ask any man’s permission, when we ask him to obey it”.
The demand for a Monitoring Committee by political parties to oversee an operation against criminals is nonsensical and violates the judgment of the Supreme Court, the spirit of the constitution, and international norms. Did police in the US seek permission of Governor Jeb Bush of Florida when they arrested his daughter Noelle Bush in Tallahassee on charges of trying to fill a fake prescription for tranquilizer Xanax in January 2002, or from President George Bush when his 19 year old daughter Jenna Bush was arrested in May 2002 for underage alcohol offenses in Texas, where legal limit is 21 years, and most recently from President Berlusconi of Italy when he was charged for moral offences related to consensual sex with an underage prostitute?
If we allow our country to be held hostage by warlords, thugs, extortion gangs and land mafia, we will decline into a state of anarchy, becoming another Somalia.
Muhammad Ali Jinnah was an Ismaili Khoja by birth, and also a man of principles who believed in religious tolerance and rule of law. He wanted Pakistan to be a modern democratic welfare state, where the Muslim majority could live in peace with members of other religions, each free to practice their faith in accordance with their beliefs, enjoying equal rights and opportunities.
His choice of a prominent Hindu Jogendra Nath Mandal – a leader of the Scheduled Caste Community from Bengal – as Pakistan’s first law minister should be proof, if any is needed, that he meant what he stated when he addressed the First Constituent Assembly of Pakistan on 11th August 1947. Mandal had served as minister in Bengal’s Nazimuddun government and later in the Suharwardy cabinet in 1946.
After Jinnah’s death in 1948, a plan was made to exploit religious sentiments of the people in the form of an Objectives Resolution on 12th March 1949 – to ward off criticism on the delay in the making of a constitution. It took them six years to adopt the first constitution of Pakistan in 1956.
While India became a republic in 1950 with the adoption of its constitution delinking itself from the British monarchy, Pakistan continued to function as per the Government of India Act of 1935. Had Jinnah lived for a few more years, Pakistan would have made a constitution by 1950, and circumstantial evidence confirms beyond a shadow of doubt that the Objective Resolution, as adopted in 1949, would never have been part of this document.
This hypocrisy has neither served Islam nor the people of Pakistan. All that it achieved was allowing corrupt, incompetent mediocre, visionless dictators to rule and plunder this country and in the process jeopardize our national security, sowing seeds of discord, intolerance and fanaticism, and a culture of institutionalized corruption.