By Huzaima Bukhari and Dr. Ikramul Haq
Ostentatiously lavish living, wasting and plundering public money, misuse of powers, disrespect towards rule of law, insatiable greed coupled with rampant corruption, apathy towards the poor and needy, inefficiency and incompetence – just to mention a few-are the well-known traits of our rulers (both military and civilian alike) and government officials – there could be some notable exceptions.
The word 'austerity' is not in the dictionary of our political leaders, high-level civil military bureaucrats, public office holders and even private individuals, who are enjoying little affluence. The habit of living beyond means – some called it our national addiction – has made us a nation with a beggar's bowl. When foreign lenders see the lifestyle of our ruling elite, they immediately show indignation – it is hard for them to believe that the rulers of a nation, living on borrowed funds, have such flamboyant ways of spending.
The country's total foreign and domestic debt at the beginning of 2011 has touched the dangerous mark of almost Rs 11 trillion – the debt-to-GDP ratio rising to 74 percent from 64 percent in January 2010. The government is continuously borrowing heavily to meet its burgeoning budgetary deficit. According to the State Bank of Pakistan, domestic debt increased to Rs 4.958 trillion by September 2010, from 4.018 trillion in September 2009.
The external debt of the government increased to Rs 3.864 trillion in September 2010 from Rs 3.656 trillion in September 2009. By September 2010, the foreign debt was $58.41 billion as against $55.62 billion in June 2010, showing an increase of $2.79 billion in three months.
By the end of 2010, our domestic debt went up to Rs 5.50 trillion as a result of the government's insatiable borrowing quest. In September 2010, domestic debt and liabilities were of Rs 5.191 trillion, which registered an increase of Rs 306 billion in just three months.
During 2009 to 2010, domestic debt showed an alarming growth of Rs 1.05 trillion. In December 2009, domestic debt/liabilities stood at Rs 4.447, trillion rupees, which increased to Rs 5.5 trillion by December 2010. Today's Pakistan represents a State where a trio of corrupt civil-military bureaucrats, crooked politicians and profit-hungry businessmen is very affluent, but the Government is on the brink of bankruptcy.
This state of affairs is the direct outcome of the state's policies of allowing a free hand to forces of loot, corruption and terrorism. No other state in the world has undergone such a horrible experience. Clearly, Pakistani rulers have destroyed the State through corruption and incompetence. Unfortunately, foreign-trained Pakistani economists (sic) have all along been defending and serving political masters, instead of advising the concerned quarters to enforce financial discipline and better financial management.
In our last week column, we raised the point why we have failed on the economic front despite the many foreign-trained economists. We have received the following reply from a noted economist working in Washington with the US Treasury Department:
"Great economists and no progress! What is missing? Perhaps you do not need economists like these but political economists. These guys are technicians, morally bankrupt, and add numbers. Apply this in your microscopic analysis. For example [name is omitted by us] never paid back his scholarship dues to the Pak government, which he owed, [name is omitted by us] struts around saying that he taught at Harvard while it was at Howard U at DC, no one would hire him in the US. [Name is omitted by us] is a CPA not an economist, [name is omitted by us] is an accountant who sold his soul to the PML-N and on and on…[name is omitted by us] is a pedestrian".
One of the major weaknesses of governance in Pakistan is unchecked wasteful spending and unwillingness to collect taxes from the rich and mighty. The worsening plight of the poor is not due to scarcity of resources-as propagated by the rulers to shift the blame on to others – but is due to the wasteful expenses on the part of the rulers and their mediocre bureaucracy. Wasteful spending out of the taxes collected from the poor and unwillingness to harness the real potential of Rs 4 trillion by taxing the rich is playing havoc the with economy as well as the socio-economic fabric of society. Behind the present chaotic socio-economic and political situation in Pakistan, amongst other factors, is an ever-widening gulf between the rich and the poor. It is shocking that with every passing day, more and more people are being pushed below the poverty line – their total number is now not less that 45 million in a country where rulers unashamedly waste billions of rupees on their personal comfort and in the name of security.
In the fiscal year 2009-10, the total tax revenue collected by Federal Board of Revenue (FBR) was around Rs 1320 billion. The Federal government showed total receipts (both tax and non-tax) at Rs 2426.7 billion. Expenditures – current plus development – were Rs 6040 billion, out of which non-development outlays were to the tune of Rs 3,746 billion.
Debt servicing alone increased to Rs 950 billion from budgeted amount of Rs 780 billion. For the financial year 2009-10, a cursory look at the Annual Budget Statement reveals a disturbing story. Analysis of two sizeable volumes, prepared and published by Finance Division, Ministry of Finance, commonly called the "Pink Book", shows how public money is wasted on unproductive, unnecessary and monstrous federal government offices when millions of people are homeless and starving.
The details of the expenditure included in this publication captioned "Details of Demands for Grants and Appropriations" are simply horrifying. We have over 50 Ministries and 135 Divisions, sub-Divisions, attached offices and allied departments.
In the budget 2009-10, the government demanded just Rs 400,000 for the adoption of Urdu language as the official language [Page 11, Volume I, Pink Book], whereas for travel and transportation of Federal Ministers alone total allocation was that of Rs 47,044,000 [Page 10, Volume I, Pink Book]. Total money given to the Supreme Court of Pakistan was Rs 354,500,000, whereas the entertainment expenditure of Prime Minister and President House was over Rs 220,700,000!
The budget sanction of the Meteorology Department is Rs 417,000,000, the Council of Islamic Ideology Rs 52,280,000 and the Model Deeni Madaris Rs 29,287,000 — their contribution towards the public hardly justifies such spending. On the contrary, the total money spared for the Scientific and Technological Division of Ministry of the Science and Technology is just Rs 298,838,000 and that too not for research but for operational expenses. It is a national shame to the note that total budget of this vital Ministry is only Rs 3,076,070,000, out of which not a single penny is earmarked for research projects.
Details for demands provided in 'Current Expenditure' (Volume I) and 'Development Expenditure' (Volume II) of the Pink Book confirm beyond doubt that billions of rupees are being wasted in the most ruthless manner. The then Secretary to the Government of Pakistan, Salman Siddique [now Chairman FBR], in his preface to this book observed: "For the day-to-day working of the ministries and their departments, this document becomes the basic reference point for expenditure management and control."
In the name of "control" and "management", the Auditor General of Pakistan observed in his annual report, all rules and regulations were blatantly violated and the national exchequer suffered the loss of billions of rupees. Yet nobody was convicted – rather, the worst offenders got pardon under the infamous NRO (National Reconciliation Ordinance – what a misnomer wherein cases of looters of national wealth were withdrawn in the name of political expediency).
The following examples for additional grants, taken from the Pink Book, are not only an eye-opener but also testify to the wasting and plundering of public money by politicians and bureaucrats:
— Prime Minister's Secretariat got an additional grant of Rs 76,656,000 for establishing camp offices at Lahore and Multan for the Prime Minister. At both places, we already have palatial government buildings, yet the Prime Minister of this starving debt-enslaved nation wants to spend millions more for aristocratic, high-born, grand, exclusive camp offices!!!
— Special grant (in addition to regular budget) of Rs 300,000,000 was given for transfer of Special Initiative Wing to Cabinet Division – one wonders whatever is the need of this wing!
— Cabinet Division got supplementary grant of Rs 22,000,000 for the Central Pool of Cars for Ministers, State Ministers etc. They are not ready to improve and use the public transport system. Further grant of Rs, 21,063,000 was given to Cabinet Division to meet the shortfall of funds in the Main Secretariat.
— Rs 15,000,000 was sanctioned by the National Assembly as additional grant to the "publicity campaign" for the Prime Minister's Special Fund for victims of terrorism. Do we need publicity for such a cause!!
— The inefficient and incompetent NAB – as adjudged by the apex Court – got Rs 55,804,000 in addition to regular budget grant just to meet shortfall in budget of NAB, Islamabad. It also managed to get supplementary grant of Rs 22,064,000 to receive its "shares in recoveries" (Islamabad office alone). This is a unique government agency that gets a share in recoveries – even though its prime duty and function is to recoup such losses – whereas all its expenses are also met from the taxpayers' money. The extra grants that NAB has extorted in budget 2009-10 from taxpayers' money for its many other offices are: Sindh (Rs 35,094,000), Punjab (Rs 34,997,000), KP (Rs 23,967,000), Balochistan (Rs 12,692,000), Rawalpindi (Rs 23,020,000) and Gilgit (Rs 687,000).
— Under Demand No 025 [Defence Services] a huge sum of Rs 13,612,717,000 has been sanctioned under the title "Essential requirement of Defence Services" but no descriptions in terms of items have been given.
— Defence Production Unit (demand No 26) depicts additional grant of Rs 1,761,196,000 for debt servicing of a loan. The details of loans, the purpose for which it was acquired etc have not been disclosed.
The above list, illustrative of some wasteful expenditure, is by no means exhaustive. It is indicative of the priorities of our rulers. They are spending lavishly by borrowing more and more money.
The figure of foreign debt is going to be US $75 billion in 2015 and that of domestic debt Rs 8 trillion. Both external and internal debts are increasing at a frightening rate. The way we are managing our resources (not exploiting them or wasting mercilessly those already available) is criminal and is leading us to self-annihilation.
Fiscal deficit of over Rs one trillion plus is expected during the current fiscal year. This testifies to the bankruptcy of our political leadership and the IMF-imposed economic managers, who keep on relying on an incompetent and corrupt bureaucracy and do not hesitate to take the first flight to Washington when things go out of hand.
The policy of appeasement towards tax evaders, money launderers and plunderers of national wealth is showing its impact in all spheres: the political culture of changing loyalties continues, corruption is rampant, money power controls all organs of State, the nation is in despair and all sectors of the economy are showing horrible indicators. In this bleak scenario, our political leaders have no definitive plans for coming out of these crises.
Nothing will change unless rulers start living like common people; within their means. They are not ready to surrender the extraordinary perks and privileges enjoyed by them at the cost of the taxpayers' money. In a democratic set-up, responsibility towards the people who voted for the parliament and accountability are interconnected. The concept of modern egalitarian state emerges from the sovereign right of the Parliament to levy taxes [Article 77 of the Constitution of Pakistan]. But at the same time it has to spend the same for public welfare rather than for personal comfort and self-aggrandisement. The second part of democracy is completely missing in Pakistan.
When half of the population of the country is facing malnutrition, the shameless indulgence of rulers and bureaucrats in wasteful expenditure continues unabated. Look at their gaudy lifestyle when people are committing suicide due to starvation. The grim truth of Pakistan is the habit on the part of the rulers and their lackeys to indulge in self-deception by relying on foreign masters, self-praise and self-perpetuation at time of crises without realising how disastrous these acts can be. This is certainly a ruinous and suicidal path. We cannot come out of debt-enslavement, which is the main cause of our subjugation, unless we first become an economically self-reliant nation. For this, the President, Prime Minister, ministers, parliamentarians, heads of political parties and high-ranking government officials would have to take the first step by living at very modest levels, start paying their taxes, bring all their foreign assets back, and then mobilise the masses for struggle to take a great economic leap forward.
Huzaima Bukhari, advocate High Court, is researcher and writer. She has authored many books with her husband Dr. Ikramul Haq. She teaches tax laws at the Lahore University of Management Sciences (LUMS).
Dr. Ikramul Haq, advocate Supreme Court, is a leading tax adviser, writer and ex-journalist. He worked in VIEWPOINT, edited by late Mazhar Ali Khan, from 1979 to 1984. In his book 'Pakistan: Drug-trap to Debt-trap', he traced the journey of Pakistan from 'Kingdom of Heroin' to 'Bankruptnuclear-State'.