www.thefinancialdaily.com  Reckoning with the Challenges As far as economy is concerned, it is in  tatters now . Chances of aid from abroad are not very bright. So basically we have to fare on our own. But there are constrains. Only losses in Sindh are being estimated at around Rs500-600bn. The same position goes with other provinces. Roughly flood losses would reach to the amount of total budget outlay of FY11 ie around Rs3 trillion (nearly $35-45bn). In response, receipts on domestic (tax or other revenue receipts) are likely to go down to worrisome levels. Muhammad Arif Ranging from politics to economy and even to our moral parameters, these-terrible-days, crises of the cruelest kind have sunk their monstrous canines in Pakistan's neck. Floods have pushed Pakistan's economy into immense pressure. Prime Minister has given the figures for rehabilitation as around $45 billion. In response, the receipts are in the range of around $2-3 billion and that too in the debt form. This is pathetic. Some circles have interpreted it as lack of credibility. To some extent it may be true but the fact is that before arrival of floods Pakistan was already in severe economic crisis and was trying to come out of stagflation (low growth rate (2-3 per cent) with higher inflationary pressure (touching 25 per cent YoY in 2008). The transformation from military dictatorship to democracy since 2007 is still in transition, creating perception about democracy as of sham democracy. Unfortunately the current leadership has no vision with reliance on ad hoc policies. Speaking of reconciliation on every question and with everyone, even with killers of Benazir Bhutto and victims of target killings in Karachi has become the main policy. Law and order is at its all-time worst. Saying "democracy is the best revenge" now looks hollow when people at the helm of affairs are just trying to complete their tenure of five years. As arranged, PML-N has to come next, so they are playing their cards very cautiously and does not seem in haste to dislodge the ongoing setup. Under such circumstances MQM, ANP, MMA, and Imran Kahn are trying to add to their own weightage. MQM has gone to the extent of calling for a French Revolution like change in Pakistan. However as a change they have demanded that patriotic generals of the military should also participate in this revolution. In this regard one should know that, though French Revolution was indigenous but it was also a complete anarchy. The forces on the left and right emerged after revolution continued with their skirmishes resulting in complete wash off of its original leadership. Most of them ended up under guillotine. This all ended with re-emergence of monarchy in the form of Napoleon Bonaparte. On the economic front, the whole scene for the coming two to three years is going to be changed and people sitting in the government have to revisit their estimates. Stabilisation programmes that are meant to control deficits would be on the backseat. This is yet to be seen that how International Monetary Fund (IMF) would react to these changes. In fact over-reliance on International aid is not going to be materialised. Multilateral agencies have started providing some relief but how they are going to be used is the big question. Empirical studies suggest that, in Pakistan for the poverty line to come down, real GDP growth above 5-6 per cent and inflation at 7-9 per cent are a must. This does not seem likely in the current situation. On the moral front, recent example is of mach-fixing or spot-fixing by our cricket payers in England. The matter is still under investigation but as a matter of fact it has already blown a big hole to our creditability outside Pakistan. In fact to come out of this crisis, all the key elements including management should take the responsibility and come clean on their mismanagement or mischief's. Transparency is the best policy to cope with such cases. As a mater of fact current management or players themselves are not bold enough to come up with such decisions, so in this particular case government has to come out with some viable solution acceptable to the people of Pakistan and world as a whole. These are the tests for democracies where they are expected to take cogent steps. Now coming back to solutions, we first take the political front. As a matter of principle there is a consensus in Pakistan that military takeover is no solution and democratic setup should continue. But the dilemma is that current regime has neither a vision nor they appear to be in a mood to deliver. The regime in fact is not the outcome of any democratic struggle but an incident which brought them into power, so neither they know the ABC of politics nor they are capable enough to deliver. It was the untimely death of Benazir Bhutto that created an opportunity for them to assume power. To remain in jail for so many years is another thing and to become a political figure is something else. For example Mohammed Ali Jinnah never went to jail but was a politician of the first order. However, in absolute terms having been in jailed on charges of corruption dose not make a person a politician capable enough to lead a country like Pakistan that is engulfed in all kinds of crisis. By definition a politician is a person who can provide vision to people and has the capability to implement that vision whenever he gets an opportunity and stands by people in their thick and thin. So basically leadership of current PPP does not measure up to these conditions. This is the dilemma and nothing can be done in this regard right now. First option in this regard is maybe that these persons change themselves which is highly unlikely. However, if they do so, then it would be a good sign for Pakistan. For this they will have to abandon their policies of reconciliation at least with killers, law-breakers and persons responsible for hoarding, price hikes, and now the dyke-busters who flooded the poor to save their land. Politicians are sometimes required to make tough decisions in the best interest of their people whether they like it or not. Moreover they are required to abandon the policy of becoming a victim of establishment to create a space for coming back in power after sometime. This kind of ploy is dangerous for the country and especially for Sindh and Balochistan. PPP has strong worker- base and some credible names are still with them they must be given an opportunity to take the front.  Apart from this the other option would be their removal. No sane person in Pakistan is going to support their removal through unconstitutional means; however you cannot stop some circles from floating their conspiracy theories. This creates dangerous environment as it is tantamount to giving rise to instability.  So Pakistan would be lucky enough if people at the helms of affairs may opt for the first option. As regards judiciary, apart from what they were doing for the last one year they now look more mature. In a country like Pakistan free judiciary has never been liked by any sitting government, so they have to move forward cautiously. Demanding too much from them by any circle would not be fair. At least if current judiciary makes its structure further accessible, transparent, and workable specifically on its bottom than it would be a miracle and blessing for the people of Pakistan. Media are also that required to play a positive role in the time to come. It has been often seen that in spite of taking some risks they sometime become victim of their own devices. They sometime inflate the facts which are non-issues. For instance, reporting some incident they try to outclass their competitors by stretching things beyond recognition only to hurt their viewers. So some balancing act is called for in this regard. Summing up on the issue, media would get mature with passage of time and only then would become a pillar of the state. They cannot be titled as such at this point of time. Currently, the main threat to Pakistan is coming from its law and order situation. The main characters in this regard are militant religious groups, either on the hills, in the mosques, seminaries or anywhere else. Politics of different sects are polluting the situation to its worst. Everyone has a personalised interpretation of Islam. Mosques and shrines have become the most dangerous places. This needs to be contained without any discrimination. All are required to cooperate with the government who in fact do not have enough force to provide security. Further the available force is also corrupt and cannot be considered fair in dealing law and order situation. As an option law and order situation cannot be handed over exclusively to different sects as it would breed further lawlessness. So as a matter of principle every one should cooperate with the government in carrying out its religious activities like processions or gatherings. This interim arrangement may remain in force till the tide of Taliban or some other groups is contained. Better law and order situation is vital for Pakistan or any country as in its absence, it cannot save its citizens or attract foreign investment, without which Pakistan can't repay its foreign debt that has bulged to $55-56 billion and is expected to swell more. As far as economy is concerned, it is in tatters now. Chances of aid from abroad are not very bright. So basically we have to fare on our own. But there are constrains. Only losses in Sindh are being estimated at around Rs500-600 billion. The same position goes with other provinces. Roughly flood losses would reach to the amount of total budget outlay of FY11 i.e. around Rs3 trillion (nearly $35-45 billion). In response, receipts on domestic (tax or other revenue receipts) are likely to go down. So government would be required to cut its PSDP/other programmes/military expenses. Further they have to ask bilateral/multilateral agencies to restructure their debts. At least payments for FY10-11-12 can be swapped for flood relief programmes. This would reduce debt burden to some extent and provide cash flows required at the moment. Further, to this, financial sector in Pakistan with Rs4.6- 5 trillion as its base is required to be involved in innovating products for helping flood victims and other needy sectors of the economy. For this at least SBP is required to hold its discount rate for the time being and in collaboration with SECP, direct banks and other non-banking financial institutions to move forward accordingly. Finally after receiving surveys of losses likely to be completed by October 2010 onward, future plans may further be fine tuned. The writer is visiting lecturer at Sheikh Zayed Sultan Institute University of Karachi and BIZTEK. E-mail: arifsbp@hotmail.com