PAKISTAN is going through its familiar politico-economic cycle. A military authoritarian regime ends up in disaster. A democratic transition takes place. The economy loses the confidence of its donors.

Before the democratic regime can even plan a change in favour of the people, the IMF comes in. The prophets of doom start shouting from the rooftops about the political ineptitude, corruption and economic incompetence of the political class. The stage is thus set again for the angels.

The recent consensus on the war on terror was only the third time in our history that we witnessed a display of maturity by the political class. The 1973 Constitution and the Charter of Democracy are the other two examples. Whatever the cynics might say, such consensuses are the most important building blocks of a continuing tradition of political and economic deliverance.

As our misfortunes apparently are more economic than political, political processes are subverted in the name of economic betterment. It is time for us as a nation to stop playing politics with the economy. Let a joint session of parliament be called to decide once and for all the contentious issues that have festered for a wasteful length of time.

We don’t have to spend time on forging a consensus on the principles of policy. These have already been enshrined in the constitution. The consensus must focus on a set of concrete actions required immediately, in the medium term and in the long term. Governments may come and go, but the consensus must hold.

There is a raging debate on the consequences of going to the IMF. In my view, expressed in these columns earlier, this could have been avoided by putting in place a timely strategy of our own.

But the preoccupation with political issues sidetracked the economy, which was losing $1bn a month rather than working for the dollar-a-day poor. No serious effort was made to prevent this drift towards the IMF.

As if the ‘do more’ demands in the war on terror were not enough, we will now see the IMF pestering us to do more. These two refrains are not disconnected. The perception of our not doing enough has been matched by the preceptors not doing enough in terms of capital flows. Which of course was the unstated assumption behind our cavalier attitude towards the economy.

This public session should start with presentations prepared by the IMF on the state of the economy. There is no harm if the presentation is made by an IMF representative.

Our economic managers should make a separate presentation on why they had to do what they did. The text of the agreement with the IMF should also be laid on the table. After a question and answer session, the joint session should recess to give time to each party to think up an alternative.

Each party must understand that the economy does not pay any heed to appeals. It responds to incentives and disincentives. Appeals to the people to make sacrifices will not work, has not worked.

Appeals to politicians, bureaucrats, generals and the rich diaspora to bring back dollars will not work. But if a joint session comes out with a consistent, predictable and transparently managed economic programme for the next decade, it will send a signal to everyone in and out of the country that there is honest money to be made here and it is safe as well.

Space here does not permit the fleshing out of concrete proposals. The purpose here is to moot the idea of a joint session on the economy and to invite discerning readers to debate the kind of issues to be discussed. Obviously the focus will be on expenditure size and priorities and the financing and effectiveness of both.

Questions must be raised about why should we spend more than we earn? Why should we import more than we export? Who needs the difference between the two and why?

An example will help illustrate the nature of the debate. Debt servicing is the major claimant on the budget. Debts, however, are incurred for expenditure. So the starting point has to be expenditure.

The major expenditure then is defence. While everyone talks about the burden, no one really comes close to seriously suggesting a significant cut. The session must commit the politicians to some exactitude. If defence is not to be cut, they should then commit to taxing the hitherto untaxed.

If they think they cannot commit to that either, they should tell the people that there will never be enough money for health and education and social transfers in this country.

Let then the people judge what it is they have to live for.

The writer, a former chief economist of the Government of Pakistan, now teaches at GC University, Lahore.

AS most people who are knowledgeable about these issues had anticipated a few months ago, we have arrived at the doorstep of yet another IMF programme.

This is now a reality that has to be reconciled with and taken into account as we debate economic policy options going forward.

The thrust of an IMF programme is going to be macroeconomic stability. By and of itself this is not a wrong policy prescription. Our macroeconomic indicators have been flashing danger signs for a while now. Fiscal and current account deficits in the seven to eight per cent range, inflation at 25 per cent on a cumulative basis and in excess of 30 per cent on a point-to-point basis, severe depletion of foreign currency reserves and a sharp depreciation of the rupee all point towards an economy that needs immediate intervention to stabilise. We all know what the broad parameters of the stabilisation programme will entail and whether one agrees with the remedy or not, we know it will create a degree of hurt for the citizens of the country.

We know that such measures have become necessary due to a combination of past policy choices and events well beyond our control in the global economy. However, if the only steps we take are to stabilise the macroeconomic indicators then it will be an incomplete recipe. We must acknowledge that the lower-income segments of society have suffered devastating blows as a result of the economic turmoil. They first were crushed under the weight of record-breaking inflation and will now have to face increasing unemployment as the economy slows down sharply as a result of the stabilisation measures.

Millions have been pushed below the poverty line in the last year and it can be expected that millions more will be pushed below in the coming year. Acknowledging this is neither unpatriotic nor tantamount to spreading doom and gloom. The economic decision-makers must acknowledge this pain and build policy options to mitigate it as an integral part of the economic revival strategy.

The pain and suffering is inevitable but the sharing of that pain amongst different segments of society is a policy choice. Under normal circumstances increasing taxation to generate more resources to help out the vulnerable would be one such policy choice. However, increasing taxation in the midst of a recession can make the recession worse. There are some taxation measures that can, and should be, taken. However, the more important aspect of the revenue measures is to increase reliance on direct taxes and balance this by reducing indirect taxes on those products which make up a significant portion of the lower-income households’ expenditure. This will help mitigate the impact of inflation for these vulnerable groups and will also have the effect of stimulating demand and offsetting partly the impact of the recession.

Most of the battle will have to be fought on the expenditure side though. We will have to take drastic steps to curtail expenditure which benefits the well off as opposed to the less well off. An egregious example of this misallocation is the loss suffered by PIA which is being paid for by the taxpayers of Pakistan. How many poor people have you seen travelling on a PIA flight? Despite only a fraction of the nation benefiting from the services of the airline, and that too the most well off, the burden on the taxpayers of subsidising PIA is greater than the entire allocation of the Benazir Income Support Programme designed for helping millions of the poorest citizens in the country.

Similarly, earlier this year we spent billions subsidising petrol and even high-octane fuel. In other words, people driving Mercedes-Benzes and large SUVs were getting their motor gasoline subsidised by the taxpayers of Pakistan. In fact, it is not just the taxpayers who paid the cost of these subsidies. The resultant fiscal deficits added to the unleashing of inflation which acts like a tax on the poorest, most vulnerable segments of society.

As the country goes through extremely tough economic times and all segments of society are being asked to share the pain and contribute, it is essential that the leadership of the country demonstrates its willingness to take the lead in offering sacrifice. Clearly those in power carry the greatest burden in this respect. However, all those who vie to lead the nation have to demonstrate their willingness to provide leadership through actions and not just words. I am sure that if the leadership of the country demonstrates its willingness to sacrifice, they will be able to galvanise the nation and turn this challenging economic situation into an opportunity to put Pakistan on to a path of sustainable progress in which all segments of society share the fruits of progress.

The third aspect of a successful three-pronged strategy is that we must not be consumed by firefighting and forget about the long-term transition that we need to make. The key elements of that long-term strategy, such as investing in the education and health of the citizens of the country, must not be postponed. This is what is required to ensure that we have the skill sets and productivity required to supply products and services demanded by the global economy. In addition, sustainable non-inflationary growth has to be backed by productivity gains otherwise the economy will simply be hit by another round of inflation as growth accelerates.

Similarly we must work urgently to develop our indigenous energy resources so that when growth returns we are not faced by another round of crippling current account deficits fuelled by imported energy. In the prioritisation of our expenditure over the next two years, we must keep this priority of investing for long-term success in mind. If we do not, we will simply recover from this economic mess to lurch a few years later into another.

ASLAM Khwaja, one of the few comrades who have refused to lay down their arms after the demise of the Communist Party of Pakistan, is such a rebellious person that one cannot expect him to back a ruler.

But this is exactly what the bohemian guy is doing these days. He has even evolved a theory to defend his support for President Asif Ali Zardari. According to him, Zardari represents the civilian establishment which has regained power after a long time from the military establishment and for this reason the president deserves the support of democratic forces and civil society.

In fact Aslam Khwaja in his newly found love for Zardari represents the Sindhi intelligentsia and educated class. Since the Movement for Restoration of Democracy (1983) and even before that Sindh’s intellectuals and educated classes have been known for their ideological politics. Then why this metamorphosis? What factors have pushed this idealist Sindhi to pragmatism? Is it pragmatism or wishful thinking? And finally, can Zardari prove to be the saviour of Sindh? These questions require honest soul-searching and critical analysis of the state of affairs in the province.

This change in political thinking of the province became visible when after the February elections a majority of Sindh’s lawyers began losing interest in the struggle for the independence of the judiciary and the reinstatement of the deposed chief justice of the Supreme Court, Justice Iftikhar Mohammad Chaudhry.

Earlier, lawyers from different cities of Sindh had been at the forefront of the struggle and, as acknowledged by one of the heroes of the lawyers’ struggle, Chaudhry Aitzaz Ahsan, it was Justice Iftikhar Chaudhry’s visit to Sukkur and Hyderabad that instilled a new spirit in the nascent movement.

But after the Pakistan People’s Party came to power, lawyers of Sindh like other educated segments of society were haunted by the fear that the lawyers’ agitation may lead to the toppling of the PPP government. As a result, many of the lawyers opted for absence from the lawyers’ weekly protest, which lost its intensity and passion in cities like Hyderabad, Sukkur, Nawabshah and Mirpurkhas.

After Gen Pervez Musharraf departed from the President House and Zardari became its new occupant, most of Sindh’s lawyers lost whatever interest they had in the lawyers’ movement. Defending this change, a Sukkur-based lawyer, who had earlier been very active, objected to the participation of the Pakistan Muslim League leader Mian Nawaz Sharif in the lawyers’ rally in Lahore during their long march to Islamabad, and alleged that Justice Chaudhry is providing political mileage to the leader from Punjab. “In this situation, why should we become part of a move that can harm the first Sindhi president?” he asked.

Similarly, it seems that most of Sindh’s educated classes, including those who have sound political knowledge as well as experience, seem to be happy with the notion of a Sindhi president, forgetting that the presidency was the very institution the PPP and Benazir Bhutto had been fighting against. Moreover, they are forgetting that President Zardari and his PPP do not appear to be eager to come to Sindh’s rescue, a fact authenticated by the proposed privatisation of the Qadirpur gas field and the government’s silence over the digging of the controversial Kalabagh-Jhelum link canal.

The roots of this attitude lie in the suffering of rural Sindh during the Musharraf era and the hopelessness that has gripped it after the assassination of Benazir Bhutto. “Yes, it is this feeling of helplessness that has made Sindh’s people pin [their] hopes on Zardari,” says Dr Inayat Magsi, a political analyst. “But this can be very dangerous,” he adds, “it was the same feeling which made the Germans throw their weight behind Hitler.” He warns that Zardari can lead the Sindhi people to such an abyss from where there may be no escape.

Given Zardari’s style of running the PPP, his failure to deliver will lead to cracks in the party coupled with public disillusionment with it. If that happens, it will come as a blow to the morale of the Sindhis.

And perhaps the masses have already started feeling the bitter taste of disillusionment. According to an eyewitness, during one of Zardari’s late-night visits to his wife’s grave, when people were asked to vacate the mausoleum an elderly man retorted to the policemen: “The man who is coming is, according to Islamic tradition, namehram (stranger) to BB and as such he is not allowed to visit her grave. Whereas we are sitting at the grave of our niyani (a respectful term for sister or daughter in Sindhi). So we are not going to leave this place. Force us out, if you like.”