Technocratic turncoats -- Dr Ashfaque H Khan
Turncoat or lota is a familiar word for the people of Pakistan. It is a pejorative commonly used for our politicians who change parties frequently at the altar of national interest. A less known, albeit not less contemptible variety, is that of technocratic turncoats or technocratic lotas who chameleon-like change their views at the right time to become acceptable to the new regime. This in sum is nothing short of intellectual corruption. Such spurious intellectuals would be like canker to any political government they embrace.
Unfortunately, Pakistan is witnessing the rise of such turncoats or lotas in recent months. Newspapers have been featuring regular statements criticising the policies of their own government from the remnants of the outgoing economic team.
They have only recently found out that the Budget Strategy Paper of the previous government is not depicting the true picture of the countrys budgetary developments. That this paper is not aligned with the so-called growth strategy of the country and the countrys energy policy, if there has been any, is flawed, and that several hundred billion of rupees have been doled out as power sector subsidies.
For three years, the remnants fully enjoyed the pay and perks of the lucrative positions, misguiding the political leadership, allowing financial hara-kari to continue and fully supporting the financial tsunami during the last few days of the outgoing government.
Thus, they remained partners in crime in destroying the economy of Pakistan. After the exit of the mentor (finance minister) and the government, the remnants have become active and are criticising the mentor and the government vehemently on all economic issues.
It is not uncommon for such lotas to criticise the outgoing regime. They do so to survive and position themselves to become acceptable to either the caretaker regime or the post election government. Such turncoats are trying to disassociate themselves from the previous economic team of which they remained active members for three years. What they have failed to realise is that success has many friends and failure has none.
The capacity and understanding of the technocratic lotas can be deduced from the following facts. At the time of presenting Federal Budget 2012-13, these turncoats fixed the revenue collection target of the Federal Board of Revenue (FBR) at Rs2381 billion. On September 25, 2012, I wrote that the FBR is not likely to collect beyond Rs2150 billion in 2012-13.
It took nine months for the lotas to realise that the revenue target was unrealistic. They have now revised the target down to Rs2126 billion which in my view is still unrealistic. Since the working environment in the FBR has deteriorated significantly in the last five years, collecting even Rs2000 billion will be an uphill task for them. I would urge the turncoats to use Rs1985to Rs2000 billion as benchmark for projecting the FBR revenue for next years budget.
As regards the budget deficit for the ongoing year, the turncoats targeted the deficit at 4.7 percent of GDP. On September 25, 2012, I wrote that the current year budget deficit is expected to be 8.0 percent of GDP. It took nine months for the turncoats to accept that the budget deficit for the year may reach over 8.0 percent of GDP. It appears that these lotas are accepting my analysis with a lag of six months.
Last week (March 26), I wrote that this years budget deficit may attain a new height in the range of 9.5-10.0 percent of GDP. Going by the trend, the lotas would find after six months that the year (2012-13) ended with a deficit of 9.5-10.0 percent of GDP.
I would also like to draw the attention of the readers towards the imminent debt repayment crisis.
The State Bank of Pakistans foreign exchange reserves as on March 28, 2013 are close to $7.0 billion. In March alone, the SBP has lost almost $800 million in its reserves.
The SBPs reserves of $7.0 billion also include $2.3 billion of its forward buying from the commercial banks.
After adjusting for forward buying the SBPs reserves stood at $4.7 billion. During April 1 and June 30, 2013, Pakistan will have to repay $905 million to the IMF alone. Assuming little or no inflow during the caretaker regime,
the SBPs foreign exchange reserves would decline to $3.8 billion by June 30 a recipe for triggering the crisis of confidence and flight of capital.
Given the complacency of the SBP, the turncoats and the people at large, it appears that the nation is waiting anxiously to see how hard the crisis hits. Perhaps they are unaware of the consequences of being in such a horrible condition.
We must learn from Greece and now Egypt. Greece has passed through such a crisis with heavy cost and was bailed out by the European Union and the IMF. Egypt is swiftly running out of the hard currency it needs to import fuel and wheat. Its economy is deteriorating fast, the growing shortages of fuel and bread now poses the greatest threats to Egypts fragile stability. Egypt is in talks with the IMF for a $4.8 billion bailout package for two years and has failed thus far to agree on the terms and conditions of the loan.
I appeal to the caretaker regime and the imminent political incumbents to not let themselves be seduced by the pernicious outpourings of these technocratic lotas. They have misguided the previous regime, are misguiding the caretaker government, and if they stay, they will misguide the new government as well.
Is this the way the nuclear power Pakistan will continue to live? One shudders even to visualise the continuation of such a hand-to-mouth existence with an impoverished treasury of foreign exchange reserves ($3-4 billion only). Time is not on Pakistans side. Wake up before it is too late. This is my humble advice.
The writer is principal and dean at NUST Business School (NBS) Islamabad. Email: ahkhan@ nbs.edu.pk
