The coming months of 2023 hold immense significance—these are going to determine the future trajectory of the country. The present government of Pakistan Democratic Movement’s (PDM) term will end on August 12, 2023 and as stipulated under Article 52(1) of the Constitution of Islamic Republic of Pakistan [“the Constitution”] the National Assembly will be dissolved after completing its five-year term. Subsequently, a caretaker government will take charge with the responsibility of conducting general elections within 60 days under Article 224(1)—in case the Prime Minister dissolves the National Assembly, then within 90 days under Article 224(2) of the Constitution.
The President of Islamic Republic of Pakistan, Dr. Arif Alvi, will also complete his term in office on September 9, 2023 and with his departure, Pakistan Tehreek-e-Insaf (PTI) will no longer have access to this position unless it wins the coming elections with a clear majority to get their own candidate elected.
Similarly, there will also be changes in the highest court of the country—Supreme Court of Pakistan. On September 16, 2023, the existing Chief Justice of Pakistan (CJP), Umer Atta Bandial, will retire thus ending the era of like-minded judges (commonly known as “Group of Five (G5)” whose role has been very significant in the judicial history of Pakistan. In recent past, the former Chief Justice of Pakistan, Mian Saqib Nisar, had frequently used this group in important political and constitutional cases. This practice was followed by all his successors.
G5 has gained considerable prominence in Pakistan, as people often refer to this bench to speculate about outcomes of various cases. The current Chief Justice of Pakistan and his predecessors, Justice Asif Saeed Khosa, Justice Gulzar Ahmed, have frequently employed this approach in various cases, giving rise to wide-spread criticism from the public, media, and civil society. With departure of the present CJP, it is anticipated that the existing G5 will lose its influence. However, there is a possibility of emergence of a new G5 consisting of like-minded judges, or perhaps the next CJP might give fresh direction for the Supreme Court, firmly committed to upholding supremacy of the Constitution.
While we cannot make definitive predictions about the future Supreme Court’s leadership, the past few years have seen a notable rise in judicial activism, which has culminated in significant challenges. Some judgments delivered by like-minded judges, lacking legal substance, have not only undermined our democracy but have also severely impacted the performance of various institutions, rule of law, and economy. In various instances, we have observed the Supreme Court violating the principle of trichotomy of powers and encroaching upon the executive’s domain. Some judges have even exceeded their designated authority by using administrative powers to intervene in the functions of the sitting government, going so far as influencing appointments and removals of public servants.
Political instability has caused serious damage to economy. Unfortunately, we are currently surviving on a standby arrangement approved by the Executive Board of International Monetary Fund (IMF) on July 12, 2023 to avert default. Over the past few years, Pakistan’s debt burden has significantly increased, and for the financial year 2023-24, we are required to pay approximately US$ 28,361 million in debt, which accounts for about 8.1% of our GDP. In the upcoming years of 2024-25, 2025-26, 2026-27, and 2027-28, Pakistan will require US$27,169 million, US$31,897 million, US$28,889 million, and US$32,856 million, respectively.
Pakistan’s GDP growth is not aligning with official expectations. While the PDM government claimed a GDP growth of 0.3% for financial year 2022-23, the recent IMF’s country Report (No. 2033/260 published on July 18, 2023), reveals that it was negative 0.5%.
There has been a notable surge in unemployment. Pakistan has encountered numerous challenges, starting with the Covid-19 pandemic, followed by catastrophic floods last year, resulting in an estimated loss of around US$30 billion, affecting approximately one-third of the population. Apart from the claims of the government, the unemployment rate during the fiscal year 2022-23 was around 8.5%, while in the current financial year it is anticipated at 8% which is worrisome.
We have mentioned in our various articles that inflation in Pakistan cannot be controlled through orthodox approaches or by raising the policy rate. We need to find avenues to address the demands of the public. In the fiscal year 2023, the inflation rate in Pakistan was close to 38% which made the life of common citizens miserable. The government did not bother to find new avenues to address the gap between demand and supply that occurred due to the catastrophic floods. However, its focus remained in raising prices rather than exploring cheaper markets to meet public demands for household goods. According to IMF’s Report, the average inflation rate will hover at approximately 25% the current fiscal year (2023-24). However, it is expected to decline to 16.2% by end June 30, 2024.
The government faces an additional challenge of sustaining exchange rate stability. The pressure on our foreign exchange reserves is expected to persist in the upcoming years, as our external debt burden is way beyond than our current reserves. In this situation, it will be challenging for the government to uphold the agreed parity between inter-bank and open market exchange rates, as well as stabilizing the Pak Rupee value in the light of IMF’s agreement.
Amid these challenges, the prospects of any relief for the common people appear bleak. Political stability is the key to attract foreign direct investment, but in the current circumstances, there seems to be little hope of witnessing a visible influx of foreign investments in the country. Furthermore, speculations and diverse theories about the fate of elections, propagated by pundits in the media, are exacerbating the situation. On the one hand, they are discouraging investors from making immediate decisions to invest in the country, and on the other hand, they are fueling societal polarization.
The way forward lies in adhering to the Constitution, and it is essential for the judiciary and all institutions to strictly follow their respective domains. The Election Commission of Pakistan bears the constitutional responsibility of conducting free and fair elections in the country. The state institutions must ensure that all political parties can participate in the electoral process without any hindrance, promoting transparency and avoiding repetition of the contentious 2018 episode where stakeholders faced criticism for managing elections through Result Transmission System (RTS). Any compromise on the integrity of elections will only serve to further destabilize the country.
We have much to be anxious about in the coming years, leaving no room for burdening the nation with additional taxes, levies, or price hikes of gas, electricity, and petroleum products. Instead, policy reforms are necessary to generate sufficient revenue to meet our expenses. In the fiscal year 2022-23, the revenue-to-expenses ratio stood at around negative 7.6% of the GDP, and it is projected to be approximately negative 7.5% in 2023-24. Implementing all these measures requires a strong government with the support of the public, without which, achieving the cherished goal of sustainability will remain an elusive dream.
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Dr. Ikramul Haq, Advocate Supreme Court, specialises in constitutional, corporate, media, ML/CFT related laws, IT, intellectual property, arbitration and international tax laws. He was full-time journalist from 1979 to 1984 with Viewpoint and Dawn. He served Civil Services of Pakistan from 1984 to 1996. He established Huzaima & Ikram in 1996 and is presently its chief partner as well as partner in Huzaima Ikram & Ijaz. He studied journalism, English literature and law. He is Chief Editor of Taxation. He is country editor and correspondent of International Bureau of Fiscal Documentation (IBFD) and member of International Fiscal Association (IFA). He is Visiting Faculty at Lahore University of Management Sciences (LUMS) and member Advisory Board and Visiting Senior Fellow of Pakistan Institute of Development Economics (PIDE).
He has coauthored with Huzaima Bukhari many books that include Tax Reforms in Pakistan: Historic & Critical Review, Towards Flat, Low-rate, Broad and Predictable Taxes (revised & Expanded Edition, Pakistan: Enigma of Taxation, Towards Flat, Low-rate, Broad and Predictable Taxes (revised/enlarged edition of December 2020), Law & Practice of Income Tax, Law , Practice of Sales Tax, Law and Practice of Corporate Law, Law & Practice of Federal Excise, Law & Practice of Sales Tax on Services, Federal Tax Laws of Pakistan, Provincial Tax Laws, Practical Handbook of Income Tax, Tax Laws of Pakistan, Principles of Income Tax with Glossary and Master Tax Guide, Income Tax Digest 1886-2011 (with judicial analysis).
He is author of Commentary on Avoidance of Double Taxation Agreements signed by Pakistan, Pakistan: From Hash to Heroin, its sequel Pakistan: Drug-trap to Debt-trap and Practical Handbook of Income Tax.
He regularly writes columns/article/papers for many Pakistani newspapers and international journals and has contributed over 2500 articles on a variety of issues of public interest, printed in various journals, magazines and newspapers at home and abroad.
Twitter: DrIkramulHaq
Abdul Rauf Shakoori, Advocate High Court, is a subject-matter expert on AML-CFT, Compliance, Cyber Crime and Risk Management. He has been providing AML-CFT advisory and training services to financial institutions (banks, DNFBPs, Investment companies, Money Service Businesses, insurance companies and securities), government institutions including law enforcement agencies located in North America (USA & CANADA), Middle East and Pakistan. His areas of expertise include legal, strategic planning, cross border transactions including but not limited to joint ventures (JVs), mergers & acquisitions (M&A), takeovers, privatizations, overseas expansions, USA Patriot Act, Banking Secrecy Act, Office of Foreign Assets Control (OFAC).
Over his career he has demonstrated excellent leadership, communication, analytical, and problem-solving skills and have also developed and delivered training courses in the areas of AML/CFT, Compliance, Fraud & Financial Crime Risk Management, Bank Secrecy, Cyber Crimes & Internet Threats against Banks, E–Channels Fraud Prevention, Security and Investigation of Financial Crimes. The courses have been delivered as practical workshops with case study driven scenarios and exams to insure knowledge transfer.
His notable publications are: Rauf’s Compilation of Corporate Laws of Pakistan, Rauf’s Company Law and Practice of Pakistan and Rauf’s Research on Labour Laws and Income Tax and others.
His articles include: Revenue collection: Contemporary targets vs. orthodox approach, It is time to say goodbye to our past, US double standards, Was Due Process Flouted While Convicting Nawaz Sharif?, FATF and unjustly grey listed Pakistan, Corruption is no excuse for Incompetence, Next step for Pakistan, Pakistan’s compliance with FATF mandates, a work in progress, Pakistan’s strategy to address FATF Mandates was Inadequate, Pakistan’s Evolving FATF Compliance, Transparency Curtails Corruption, Pakistan’s Long Road towards FATF Compliance, Pakistan’s Archaic Approach to Addressing FATF Mandates, FATF: Challenges for June deadline, Pakistan: Combating the illicit flow of money, Regulating Crypto: An uphill task for Pakistan. Pakistan’s economy – Chicanery of numbers. Pakistan: Reclaiming its space on FATF whitelist. Sacred Games: Kulbhushan Jadhav Case. National FATF secretariat and Financial Monitoring Unit. The FATF challenge. Pakistan: Crucial FATF hearing. Pakistan: Dissecting FATF Failure, Environmental crimes: An emerging challenge, Countering corrupt practices .
Twitter: Adbul Rauf Shakoori
The recent publication, coauthored by these writes, is Pakistan Tackling FATF: Challenges & Solutions, available at: https://www.amazon.com/dp/B08RXH8W46 and https://aacp.com.pk/
