ISLAMABAD, 31 March 2008 — Prime Minister Yousaf Raza Gilani’s government has a new 100-Day Plan to boost the economy in the short term. The plan targets implementation of some of the pressing public demands voiced at the time of Feb. 18 elections.
Gilani faces a grim task to stem the tide of high inflation — especially food inflation, shortage of food items like wheat flour and edible oil, natural gas and electricity, sky-rocketing oil prices, and the newly discovered fact of increasing poverty, contrary to what was being claimed by the outgoing government.
There also are serious questions over the claimed-for rise in per capita income.
Gilani, after being voted as PM, made a pledge in the National Assembly that the plan would “address issues like price hike, power outages or load-shedding, poverty, unemployment, and other problems.” The overall inflation, still spiraling, this year is at an all-time record of 16.5 percent, against the outgoing government’s claim of 8 to 9 percent.
More alarmingly, food inflation is reached an excruciating rate of 21 percent during eight months to February 2008. It was one of the key causes of election defeat of the pro-Musharraf Pakistan Muslim League-Qaed.
The severity of issues can be gauged by the fact that despite the ostensible “strength and stability” of the Musharraf-led government, the people felt that the problems not only were not solved, but were worsening. It led to the ouster of the PML-Q government in the national elections.
Gilani, besides a challenging economic front, is beset with political problems that any coalition government has to live with. The Cabinet will be known as “coalition government of the Pakistan Democratic Alliance (PDA), Gilani said.
The coalition consists of four parties — Pakistan Peoples Party (PPP) of late Prime Minister Benazir Bhutto, to which Gilani belongs, and two-time Prime Minister Nawaz Sharif’s Pakistan Muslim League-Nawaz (PML-N).
The other partners are: North West Frontier Province (NWFP)-based Awami National Party (ANP) and rightist party Jamiatul Ulema-e-Islam of Maulana Fazlur Rahman.
The coalition has been put together in the spirit of “a national consensus government.”
Many of the party leaders as well as prospective ministerial candidates are indicating that the government will announce, within days, “an economic relief package for the masses.”
Naveed Qamar, a PPP leader and former minister for finance and privatization in late Ms. Bhutto’s Cabinet, says the proposed relief package would be “taking austerity measures, including cutting down expenditure of the prime minister by 40 percent, impose a ban on purchasing new cars for government use, and create fiscal space” to expand medicare for the poor and other relief measures.
The government is planning to pass a law to increase social spending, particularly on health and education on the lines of the existing Fiscal Responsibility Law that limits borrowing by the government at home and abroad.
But there are limits to increase in social spending as the government already is running a big budgetary deficit.
The newly elected parliamentarians also plan to reveal details of the huge and still growing defense budgets. Annual defense budgets have remained outside the parliamentary purview because of ostensible “secrecy,” that was used to cover up nondefense-related spending.
But normal business will be expanded. Import of luxury items including expensive cellular phones and high powered autos will be slashed in order to reduce the growing trade deficit.
Trade deficit during the first eight months to February — of fiscal 2008 — is already a record $12.36 billion as against the full year government projection of $10.6 billion. Import of capital good, industrial machinery and inputs, large power plants, and utility vehicles and heavy construction equipment will be given priority.
Businessmen and industrialist normally feel more comfortable with authoritarian or military rule in Pakistan because of its ostensible “stability” factor.
They are upbeat as a democratically elected civilian Cabinet is becoming operational. But, the new government will have to strike a balance between pressing popular demands, including inflation and business profitability.
Tanvir Ahmed Sheikh, president of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), expressed confidence in Gilani’s “managerial acumen, political maturity and steadfastness.”
“The new prime minister should prepare a strategic socio-economic plan to boost industry, exports and trade, create jobs and alleviate poverty. I have full faith that the ruling coalition will deliver,” Sheikh said.
Shamim A. Shamsi, president of Karachi Chamber of Commerce and Industry (KCCI) has asked the new Cabinet to “revisit economic policy issues and resolve them for the good of the people.”
Majyd Aziz, former president of KCCI, focused his hopes on Naveed Qamar and Ishaq Dar, both of whom have served as finance ministers in different Cabinets in the past. The two are “well-versed in issues confronting the economy.”
The present multiparty coalition is a departure from the politics of confrontation which is crucial to realize the development potential in Pakistan, other businessmen say. The key test for the new PM and his Cabinet will be on how it strikes a balance in varying, and often conflicting, interests in the national budget for fiscal 2008 that is just around the corner.