Fear of increasing social tension due to inflation - Economist Khurram Shehzad on IMF program
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00:00Good morning to you, Mr. Khurram.
00:02This is a big issue.
00:05It is said that more than 9 billion dollars have been saved.
00:09But I think 7 billion dollars are also included in this.
00:12So we have very little savings.
00:14And if we sum up the overall situation,
00:17then the people are being strangled.
00:21If we talk about taxation, if we talk about electricity prices,
00:25and then again and again we talk about the way out of government expenditures,
00:29have you seen any reduction in that aspect after this situation?
00:35Good morning.
00:37The thing is that the expenditures have not reduced,
00:41they have actually increased.
00:43And the issue is that the governments that have come,
00:47they have not reduced their expenditures in the way they should.
00:52And if we continue to follow this strategy,
00:57then naturally our taxes will not be able to be paid.
01:02And the result of this is that we go towards loans.
01:06And if we go towards loans, then there is an increase in inflation,
01:09there is an increase in interest rates,
01:11there is a decrease in investment,
01:13and then a common man does not get the employment he needs,
01:16or there is a growth in his income,
01:18that does not come.
01:20So you have made the right point
01:22that the main issue is our expenses,
01:25which we have to control a lot,
01:27in which from pension,
01:29from privatization,
01:31and from running up the government,
01:33you know, the expenses of the federal government,
01:35then the expenses of the provincial government,
01:37then they do not have to raise their taxes,
01:39as it happens all over the world.
01:41So this is a big structural problem,
01:44which if we do it right,
01:46then the need for IMS can also be reduced,
01:49and our expenses can also be reduced,
01:51and we can spread our feet as much as we want.
01:54Basically, it can be done in such a way
01:57that you do a revolution of power.
01:59There are three layers of democracy,
02:01revolution of powers,
02:03there is a federal level, then there is a provincial level,
02:05then at the local level,
02:07the financial and management powers,
02:10they go to the local level.
02:13So if we do that,
02:15in the coming years,
02:17if we do it as soon as possible,
02:19because we have come to the provincial level,
02:21but we have not gone below that.
02:23So you will see that
02:25when the financial and administrative responsibilities
02:28come down a lot,
02:30when they are decentralized,
02:32then a common man,
02:34not only his children,
02:36his family,
02:38health, education,
02:40and sanitation,
02:42he starts getting a lot of basics.
02:44In fact, the financial sanity that you have,
02:46starts coming.
02:48So I think this will be a big reform,
02:50because of which your expenses,
02:52the effect of inflation,
02:54not getting employment for a common man,
02:56all these problems are linked to it.
02:58So this is a big thing that should be done,
03:00because of which the things you have said in the beginning,
03:02in which the report of Moody's has also been pointed out,
03:04IMF also does it time to time,
03:06all these things can be better.
03:08But the thing is that if we take 25 programs
03:10and do not do our reforms,
03:12then the situation will remain the same.
03:14How much is the realization?
03:16Because you must know very closely,
03:18the policy makers,
03:20how much is the realization of the government?
03:22Because the Moody's report is saying,
03:24that the position of foreign Pakistan,
03:26is not stable, it is weak,
03:28because of inflation,
03:30there is a risk of social tension.
03:32Now obviously, we are being told
03:34that the situation is such,
03:36difficult decisions will have to be made,
03:38but the talk of stress,
03:40the talk of public sentiment,
03:42is the policy makers aware of this?
03:44Look, I think it should be done,
03:46and I think it is, to a large extent.
03:48If you look at it,
03:50I think there are only three things,
03:52which seem to be missing,
03:54and they seem to be in some matters.
03:56The biggest thing in that is the political will.
03:58If you want to do something,
04:00then you do it and show it.
04:02You have done it in the last year and a half,
04:04the economy has stabilized,
04:06the currency has also stabilized,
04:08many other things have improved.
04:10And along with that,
04:12there is the rate of the government,
04:14the rate of the state.
04:16Whether it is the agriculture sector,
04:18whether it is the land mafia,
04:20whatever it is,
04:22they cannot issue taxes against them.
04:24You have also seen in the IMF,
04:26they have said that you should take taxes
04:28from the agriculture sector,
04:30which we should do ourselves.
04:32If there is an income of the agriculture sector,
04:34then there should be a suitable tax on it.
04:36Horizontal equity means that
04:38everyone has to pay taxes,
04:40and whoever has a profit,
04:42he should have a certain tax.
04:44But somewhere the political will is visible,
04:46the rate of the state is visible,
04:48and somewhere it is not visible.
04:50So we will have to do this across the board.
04:52Governance, rate of the state,
04:54and political will.
04:56These three things will be there,
04:58and everything will be fine.
05:00This is not across the board,
05:02we will have to do it,
05:04otherwise these things cannot work.
05:06Our export-driven economy is not there.
05:08Our tax-driven economy is still there,
05:10I think.
05:12I am saying that
05:14if the IMF intervenes in everything,
05:16then why is there no intervention
05:18in this matter?
05:20It is a different thing
05:22to get this understood.
05:24This has come to light.
05:26After coming to the opposition,
05:28the rulers realize what is happening
05:30with the people.
05:32When there are rulers,
05:34this realization is not there.
05:36At that time, the people are told again and again.
05:38You can consider many things in this.
05:40Tax-free income,
05:42tax-free pensions,
05:44electricity-free units,
05:46from Grade 1 to Grade 22,
05:48worth billions of rupees.
05:50It was also said that
05:52something will happen,
05:54but nothing has happened yet.
05:56Government expenditures,
05:58increasing expenses every year,
06:00and the burden of taxes on the people,
06:02which is difficult for people to manage.
06:04I think the IMF should go
06:06towards micro-management.
06:08If they have the will,
06:10they can do more.
06:12No, I will not suggest
06:14that the IMF should be brought
06:16to micro-management.
06:18Why should we let the IMF come?
06:20I am saying that
06:22when I spoke to you last time,
06:24the IMF came to the point
06:26that it should also be left
06:28in the free market.
06:30You remember that, right?
06:32Yes, I am saying that
06:34if you let someone
06:36go to micro-management,
06:38then naturally,
06:40they will start
06:42exploiting the house.
06:44I am saying that we should
06:46end the IMF.
06:48We should realize
06:50that this is a matter
06:52of our self-respect and
06:54sovereignty.
06:56We are a nuclear state.
06:58Why should we follow the IMF?
07:00The IMF has given us a program.
07:02It is a big deal that
07:04we should realize
07:06that someone is giving us money
07:08for the 25th time.
07:10So, why should we not
07:12correct ourselves?
07:14The foreign funding of Pakistan
07:16will increase.
07:18It will open a window for us.
07:20So, let's take advantage of it.
07:22Then we may not have to
07:24go to the IMF program.
07:26Exactly, I am saying that
07:28if the IMF gives you a framework
07:30and you have the capacity,
07:32why should we cut our hands
07:34and give it to someone?
07:36So, I am saying that
07:38we should realize
07:40that we are a big country
07:42with 25 crore people.
07:44So, why should we not
07:46correct the basic economics
07:48for its betterment,
07:50education and health?
07:52As I said in the beginning,
07:54we need a rate of the state,
07:56a political will,
07:58a governance system,
08:00and we should do it.
08:02One more thing, the World Economic
08:04Outlook Update report says
08:06that the energy and food prices
08:08will gradually reach the level
08:10before Corona.
08:12Tell me, why will it be possible?
08:14Where will it be?
08:16Will it be possible in Pakistan?
08:18Yes, it will be possible.
08:20Global forces
08:22have an impact on you
08:24as well.
08:26The currency
08:28reflects those values.
08:30And of course,
08:32the demand supply gaps
08:34cause the global
08:36differences.
08:38Naturally, it will have an impact on us as well.
08:40It's not like we are isolated from the world.
08:42But it will increase.
08:44The more we follow the IMF
08:46program, the more we need
08:48to follow it.
08:50And as a result,
08:52it has an impact on all the
08:54world's prices.
08:56Energy prices,
08:58it has an impact on all of them.
09:00But definitely not in Pakistan.
09:02It will have an impact.
09:04We will see that in the coming months and years.