democracy!
It is unfortunate that Pakistans ruling elite gets to keep its perks and privileges no matter how difficult economic conditions in the country may be. They are willing to beg from friendly countries, borrow from international lenders and steal from the poor to get things going for themselves.
When the government embarked upon its macro-economic stabilisation programme and subsequently approached the IMF for balance-of-payments support to correct financial imbalances, it was obvious that some spending somewhere would have to be curtailed.
It was also a foregone conclusion that the cut would not affect the governments administrative expenses i.e. its perks and privileges, and that the common people would be made to pay the price for the financial indiscretions and profligacy of the rulers. Few believed officials who tried to convince the public otherwise.
It did not take people very long to start feeling the heat of government policies. Fuel subsidies were eliminated in fact, consumers are now paying far more than the international price of oil and power subsidies slashed.
The government has now reduced its development spending by more than Rs100bn in the first seven months of this fiscal in the name of rationalising the Public Sector Development Programme. The size of the latter is expected to be trimmed further during the rest of the financial year.
Another report appearing in a section of the press a few days back pointed out that the social sector including health, education, water supply, etc was a major victim of the reduction in development spending: allocation for it was cut by a hefty Rs79.50bn.
The twin measures cuts in subsidy and reduction in development expenditure were the easy way out of economic trouble for the government. They have helped fiscal deficit to come down to 1.9 per cent during the first half of the year.
The government hopes to contain it at less than 4.2 per cent by the end of the year. But the elimination of subsidies has raised the cost of living and forced many to cut essential spending on education and health.
The removal of 125 development projects from the PSDP and delays in the implementation of others mean thousands of new jobs will never materialise. But, at the same time, the government has failed to restrict its non-development expenditure which has grown by over 25 per cent year-on-year.
In spite of public statements, it has also dithered on promises to tax the rich who enjoy massive exemptions. To have done that would have also been a way out of the economic morass. But it was difficult to do because of the damage to elite interests. Public anger against the governments policies is, therefore, not without reason.