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23 - 29 June , 2012
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ECONOMIC REVIEW
Mounting Trust Deficit
by SHABBIR H. KAZMI

Mounting Trust Deficit

At present experts say Pakistan is suffering the most due to two deficits namely, budget deficit and current account deficit but fail to recognize that the third deficit 'trust deficit' has become the mother of all evils. Over the years and through an organized campaign almost all the institutions operating in the country have been maligned from politicians to bureaucracy and from defense forces to judiciary and the recent victim is the media. All this seems to be part of the greater agenda to prove that Pakistan is a morally bankrupt society. Once this is proved the next item on agenda will be to prove 'the country is incapable of guarding its nuclear program' to take possession of these assets.
Many may wonder why there is an organized campaign to create 'trust deficit'. The propagators know Pakistan has the capacity to overcome budget and current account deficits if masses have faith in the country, in the government and in the institutions. Therefore, enhancing mistrust and creating frustration and desperation among the masses is necessary so that people start doubting about all the four pillars of the society.
The perpetrators have been successful to a large extent as leaders of almost all the political parties are busy in mudslinging and an ordinary citizen is forced to reach the conclusion that all of them are corrupt. Over the years media, both electronic and print, has been polluting the minds. After watching talk shows Mounting Trust Deficitone even doubts if any sincere political leader is present in the country. It is also being suggested that the successive governments, having vested interests are plunging the country deeper into the mess.
Watching budget sessions of National and provincial assemblies on television creates the most disgusting feeling about the elected representatives. Gone are the days when the legislators used to follow a code of conduct. The worst has been the attitude of the members belonging to the two leading political parties, PPP and PML-N. The archrivals of the past have 'Charter of Democracy' only to prolong their rule, PPP at the federal and PML-N in Punjab. PML-N calls PPP regime the most corrupt but refuses to table 'non-confidence move' against the prime minister to avoid the blame that it derailed democratic process. While the sham democracy has prevailed over the country it faces many crises.
Till recently, it was said that the only ray of hope left in the country is judiciary. However, the recent saga involving son of Chief Justice of Pakistan is aimed at shattering the confidence in the judiciary too. The Chief Justice has been put in quandary. If he decides to remain on the bench it would have been much easier for his opponents to blame him of nepotism. If he walks away the 'law of necessity' may prevail over and convicting his son would become much easier.
Killing of Osama and Libi in Pakistan was aimed at proving that the country is a safe haven for terrorists. It is also being said that Haqqani network has its hideouts in Pakistan. It seems that passing of resolution by the parliament approving guidelines for future engagement of Pakistan and asking the United States to tender unconditional apology has upset the sole surviving super power.
In the aftermath of Raymond Davis saga, Pakistanis have started saying that CIA must rein in its operators. Even a man of ordinary wit is saying that the United States has created another state within Mounting Trust DeficitPakistan. They openly say that the success of a drone attack is dependent on the ground support. Earlier, it was also alleged that foreign intelligence agencies were extending all sort of support to Jundullah, a group fighting for the rights of Balochs in Pakistan as well as Iran. The unrest in Balochistan and blowing up of gas pipelines is aimed at sabotaging Iran-Pakistan gas pipeline project.
No one has any doubt that prevailing energy crisis is 'man-made'. Ample gas is available in the country but industries in Punjab get gas for three and half days, only because huge quantities are being pilfered by the favorites. Pakistan has installed capacity to produce around 24,000MW electricity but actual generation hovers below 12,000MW. The entire energy chain is victim of 'circular debt' due to failure of the utilities to contain pilferage and recover the outstanding dues. It may not be wrong to say that if electricity distribution companies dispatch 100 units they get payment for 30 units only. In such a scenario the hike in tariff becomes a reason to pilfer more or not to pay for the units already consumed.
Energy crisis has pegged GDP growth rate at round 3%. The other hazards are: 1) exportables can't be produced; 2) manufactures are being rendered unable to compete in the global markets; 3) job opportunities are shrinking and 4) overall purchasing power of the people is going down. As a result, tax collection is on the decline. One may say the premise is wrong because revenue collection is on the rise. It is only because of hike in import of energy products on which the government charges colossal duties at import level.
Despite hike in revenue collection budget deficit is on the rise because of inefficiencies and lack of capacity of those responsible to undertaking projects. Based on next year's allocation for PSDP at an average nearly Rs3 billion have to be spent on daily basis but experts have the consensus that neither the projects have been identified nor the respective departments have the capacity to manage this kind of spending. At the best people will be fired, office facilities will be created and expensive vehicles will be bought but spending on projects will be miniscule.
If the government is serious in enhancing exports cost of doing business has to be brought down. This includes uninterrupted supply of electricity and gas at affordable cost, but before that confidence of people has to be restored. Confidence is not restored by tall claims but by acts. Despite all odds Pakistan is likely to post 3% GDP growth rate and achieve export target of US425 billion. Just imagine what would have happened had industries been operating at optimum capacities?


 
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