Tag Archives: fiscal

Pakistan Economy: Sinking Like A Rock, says Asian Development Bank.

Sinking like a rock: Slim chances of recovery for Pakistan’s directionless economy, says ADB

ISLAMABAD: Amid deep-rooted concerns over a “directionless” economy due to failure of the previous government and inability of the caretaker setup to take immediate meaningful steps, the Asian Development Bank has warned that Pakistan’s current growth model is unsustainable that also undermines future prospects.

In its Asian Development Outlook, the Manila-based lending agency has painted an extremely bleak picture of Pakistan’s economy that is “directionless” and immediate recovery chances are almost nil amid a worsening balance of payments position.

“A difficult political situation stalled effective policy response to macroeconomic and structural problems, especially regarding energy, and the end of the government’s 5-year term in mid-March limited political scope for major policy or structural reforms,” it said.

The economic developments in this fiscal year are unfolding along broadly similar lines as previous year, but with “deepening concerns about sustainability and the adequacy of forex reserves”.

A missing link in the ADB’s analysis of political failures is the role of bureaucrats in running the affairs of the government who often do not disclose actual extent of problems to the leadership.

Continue reading Pakistan Economy: Sinking Like A Rock, says Asian Development Bank.

Pakistan’s economy Plugging leaks, poking holes – Who will pay for Pakistan’s state?

PAKISTAN’S national poet, Muhammad Iqbal, believed the subcontinent’s Muslims needed to unite if they were to prosper. Without a strong sense of nationhood, he wrote, “mountains become straw and are blown away in the wind”.

Poetry and taxes do not often mix. But those melancholy lines grace an analysis of Pakistan’s fiscal plight by Ehtisham Ahmad of the London School of Economics. The country’s tax revenues have collapsed. Its debt is almost certainly unsustainable without outside help. And yet Pakistan does not pull together. “Textile lobbies, the urban gentry, traders and agriculturists, all point to the other and say: Tax that group first, but do not tax me,” Mr Ahmad writes.

The tax authorities can identify a mere 768,000 individuals who paid income tax last year. Even fewer—just 270,000—have paid something in each of the past three years. That is one reason why Pakistan’s tax revenues amounted to only 9.1% of GDP in the latest fiscal year, one of the lowest ratios in the world (see chart). These are exceedingly narrow shoulders on which to rest a nuclear-armed state of 180m people. The culture of cheating starts at the top. Most members of parliament, many of them conspicuously affluent, do not file tax returns.

In the months before an election, due by May, the government of President Asif Zardari of the Pakistan Peoples Party (PPP) is proposing a controversial remedy: an amnesty for evaders. They will be invited to wipe the slate clean with a one-off payment of only 40,000 rupees ($400). The government says it is a quick way to resuscitate the public finances and expand the tax net. Its critics see the amnesty as a boon for politically connected crooks.

Continue reading Pakistan’s economy Plugging leaks, poking holes – Who will pay for Pakistan’s state?

What happens when organized crime takes office? The rise of the mafia states

Mafia States – Organized Crime Takes Office

By Moisés Naím

The Rise of the Mezzanine Rulers

Michael Crawford and Jami Miscik

Governments across the Middle East and South Asia are increasingly losing power to substate actors that are inserting themselves at a mezzanine level of rule between the government and the people. Western policymakers must address the problem systematically, at both a political and a legal level, rather than continue to pursue reactive and disjointed measures on a case-by-case basis.

Continue reading What happens when organized crime takes office? The rise of the mafia states

The True Cost of 9/11 – Trillions and trillions wasted on wars, a fiscal catastrophe, a weaker America.

– By Joseph E. Stiglitz

The Sept. 11, 2001, terror attacks by al-Qaida were meant to harm the United States, and they did, but in ways that Osama Bin Laden probably never imagined. President George W. Bush’s response to the attacks compromised America’s basic principles, undermined its economy, and weakened its security.

Indeed, when Linda Bilmes and I calculated America’s war costs three years ago, the conservative tally was $3 trillion to $5 trillion. Since then, the costs have mounted further. With almost 50 percent of returning troops eligible to receive some level of disability payment, and more than 600,000 treated so far in veterans’ medical facilities, we now estimate that future disability payments and health care costs will total $600 billion to $900 billion. The social costs, reflected in veteran suicides (which have topped 18 per day in recent years) and family breakups, are incalculable.

Even if Bush could be forgiven for taking America, and much of the rest of the world, to war on false pretenses, and for misrepresenting the cost of the venture, there is no excuse for how he chose to finance it. His was the first war in history paid for entirely on credit. As America went into battle, with deficits already soaring from his 2001 tax cut, Bush decided to plunge ahead with yet another round of tax “relief” for the wealthy.

Today, America is focused on unemployment and the deficit. Both threats to America’s future can, in no small measure, be traced to the wars in Afghanistan and Iraq. Increased defense spending, together with the Bush tax cuts, is a key reason why America went from a fiscal surplus of 2 percent of GDP when Bush was elected to its parlous deficit and debt position today. Direct government spending on those wars so far amounts to roughly $2 trillion—$17,000 for every U.S. household—with bills yet to be received increasing this amount by more than 50 percent. ….

Read more → slate

False nationalism

By S. Akbar Zaidi

THE comprador, clientelist military of a clientelist state has suddenly found its own sense of pride and nationalism. A military which has been critically dependent on US aid for far too many years has now turned around to say that it will ‘rely on domestic resources’ to make up for the $800m cut, or threat of a cut, by the Americans.

Given the nature of the political economy of Pakistan and of its military, at a time of a fiscal crisis in the state, this is a serious joke.

The amusing part of this newfound, false nationalism of Pakistan’s military is that the latter has not in the past ever said ‘no’ to US or any other aid, and nor has it said that it will ‘rely on domestic resources’. This has been said by all civilian governments, in jest of course, whenever they were denied financial assistance, but this is the first time that Pakistan’s armed forces have woken up to their own very compromised, comprador status. Moreover, just to underscore how false such statements are, one needs to be reminded that the $800m which might be cut is a mere one-third of what the US is to give Pakistan’s military this year. The remaining $1.6bn which Pakistan’s military (and not Pakistan’s government — a critical distinction) receives, will of course be utilised in the way the Americans demand of Pakistan’s military.

One needs to explain and emphasise the nature and extent of US military aid to Pakistan’s military to highlight how critical this has been to Pakistan’s army, a fact which will show why this newfound nationalism is so false and such a joke. For instance, just in the period since 2001, over the course of what was called the war on terror, the US gave the government (or the country) of Pakistan $12.14bn over 2002-09. Of this, as much as $8.91bn, or 73 per cent, was classified as ‘security-related’ aid to Pakistan, most of which was given as part of the services provided by Pakistan’s military, as part of the Coalition Support Funds. Clearly, the Bush-Musharraf relationship was largely the US providing aid to Pakistan’s military, and not to its people.

It was only after the change of government in both countries that the nature of the aid-giving relationship with Pakistan changed. Once the Obama administration took over and the Kerry-Lugar-Berman Act was passed there was a considerable shift towards non-military aid to Pakistan. In 2009 and 2010, as much as $6.61bn was authorised by the US administration, although not all of it was disbursed. Of this, as much as 44 per cent was meant as non-military aid, for economic-related purposes, a huge, and critical, shift compared to the past.

What these numbers show is that a considerable part of assistance from the US to ‘Pakistan’, has actually come to Pakistan’s military. To emphasise this point further, if we look at the current fiscal year, the US is said to have earlier promised $2.4bn specifically marked as assistance to Pakistan’s military or military aid.

In the same year, the Government of Pakistan in the budget, allocated Rs495bn to the military. Hence, the US taxpayer was funding the equivalent of (or an additional) 41 per cent of what the Pakistani taxpayer was providing. By all accounts, a very considerable amount and a significant proportion of expenditure by, and on, Pakistan’s military. Pakistan’s military is still critically dependent on US aid.

The second consequence of the statement by the Pakistan military, of relying on ‘our own resources’, is equally troubling. First of all, ‘our’ resources are in particularly bad shape, thanks mainly to a huge military budget over the years ….

Read more → DAWN.COM

Indian budget projects economic growth

India’s government has unveiled its annual budget, saying that the economy is expected to grow at 9% in 2012.

Finance Minister Pranab Mukherjee said the growth rate for the current fiscal year was projected at 8.5%.

He said inflation would decrease over the next fiscal year – the current rate is 8.4%. But food price inflation, at 17%, “remains a concern”.

Mr Mukherjee promised action on food security and pledged an increase in social spending. …

Read more : BBC

Professional Beggars at their best … but .. Beggars are not choosers!

Vice President Joe Biden is the latest high level U.S dignitary to visit Pakistan. As the series of such high profile visits continues, one wonders what actually transpires in such meetings and what kind of assurances are given from both sides to each other. In this episode of Reporter, Arshad Sharif tries to find out what PM Gilani meant when he said that he has given assurances to Joe Biden that practical steps will be taken to resolve all the difficult problems.

Courtesy: Dawn News (program Reporter with Arshad Sharif)

Source- You Tube Link

WikiLeaks: storm in a teacup – Dr Manzur Ejaz

A weak and unpopular presidency suits the military better. Why would the military create a situation in which Mian Nawaz Sharif — with greater popularity — would take the reins in his hands and start implementing the Kerry-Lugar Bill’s conditions on the military? …

Read more : Wichaar

 

Development of Sindh: Shallow Promises

– Mushtaq Rajpar

PPP ruled Sindh government is about to present third budget of their tenure. Be ready for new promises, pledges and schemes. Are you interested listening and read all that? What did Sindh government achieved in the current outgoing fiscal year 2009-10?

People of Sindh want to know. Can Sindh government publish a Development Review or Economic Review and inform the public on state of economy, development and projects announced last year in the budget.

Rs 113 billion were allocated for development, including Rs 16 billion by federal government. How much actually has been achieved?

Newspapers report suggest development funds were not utilized more than 42%. This is height of negligence and ineptness of an elected government. Sindh continues to live in backwardness; people live under hard socio-economic conditions.

Budget 2009-10

· Rs. 113 development out lay included Rs 75 billion ADP: Where did this money go?

· The federal government was to be asked to settled the issue of Rs204 billion arrears of GST on services. Did they get arrears back?

· Rs. 2 billion were allocated for Thar Coal Development