The endless spiral By Khurram Husain


IT has been said before, in the recent past, in this space and it bears repeating today. This never ends. This lurching from one crisis to the next is, and will remain, a constant feature in our lives because the central problem will remain in place. That problem is simple. Nobody is in charge here. Everybody has their specific agendas that they are busy securing and there is nothing that ties it together at the top.

The last time I shared this thought — of a never-ending series of crisis like situations that the country will lurch from one after another — it was in the midst of the food price spiral. This winter the government gave us the third such spiral, each more fierce than the one that came before, and in each the central causes were the same: poor administration and control. This was amply covered by the twin wheat and sugar inquiry commission reports, and that inflationary fire is now being doused with massive imported consignments of both commodities.

No sooner than the food price spiral began to fade from the headlines than we had news of a colossal blunder in the import of LNG. For some inexplicable reason they did not order any LNG for the winter as is standard practice back in the summer (usually by August) when it can be booked in advance for winter delivery at rates cheaper than what are available closer to the delivery date. When they finally woke up to the fiasco in November and started booking winter deliveries the rates were so expensive that the whole affair has blown up in their faces.

In the last round held a few days ago they tried to book a few LNG cargoes for delivery in early January, a lead time of literally a few weeks which, in the LNG markets, is seen as a distress order. They actually had to activate emergency clauses of the Public Procurement Rules in order to be able to do this, and the bids they received were described by one young Bloomberg LNG analyst as “the most expensive Asian cargoes in [approximately] 6 years”.

One crisis nearly abates and another looms. This is going to be an endless cycle. After LNG there is the power sector and mounting circular debt that is refusing to subside and no discernible action plan is on the horizon for how to tackle this problem. The IMF has demanded such an action plan as a condition for resumption of the programme that was suspended in April once the Covid lockdowns kicked in, and by September we heard that the then adviser on power, Shahzad Qasim, had nearly completed the plan when he suddenly left his position and a new adviser entered, the former CEO of K Electric, Tabish Gauhar.

Today, there is no news on that action plan, except that it will somehow become a part of the overall “subsidy rationalisation” effort that the government is now trying to embark upon. This is fancy language for “subsidy reduction”.

Failure to manage the food supply chain, particularly procurement, gave us a food price spiral, controlling which is taking large government expenditures and foreign exchange. Failure to manage the LNG supply chain will give us expensive gas, which will either be passed on to consumers or heavily subsidised, which means it will be passed on to taxpayers instead (adding up to much the same thing). Failure to manage the power sector will give us a circular debt, which will result in higher power tariffs since the IMF will not allow using government resources to continue underwriting power-sector mismanagement.

In every such case of failure to run things, the bill is borne by the people. The results are rising subsidy payments or rising prices, which leads to either inflation or rising fiscal deficit, which leads to more pressures on the common citizenry or rising government debt and so on in an endless cycle. And we have not even touched on all the other areas where misgovernance is extracting a dire toll. For example, the upstream gas sector, where the gas fields are located, is seeing another crisis emerging over the past year or so, far from the media’s glare.

The reason this cycle will never break is because it takes a concerted effort at the top to pull things together to operate this system. But at the top we have a prime minister who appears more concerned with his image on TV and catching Nawaz Sharif. He is also busy lavishing more and more ‘incentives’ on industry, especially on property developers, even if doing so goes against the thrust of his avowed policy goals in the other areas, such as documentation of the economy (a priority that has fully dropped off the table since it has no takers). Policymaking and implementation, let alone legislation, don’t seem anywhere near the top of the priority list. The result is the government is divided into silos, each run by an adviser (with an occasional elected minister here and there), with nothing at the top holding it together, no hand on the tiller.

This is not a situation that can be fixed with a presentation or two, or a lecture to try and take things more seriously, or any amount of cajoling. To all those who live in the world of WhatsApp forwards and short video clips, of memes and tweets, whose idea of success is outtalking the other regardless of facts, reality is a far cry. And those who are out of touch with reality cannot be expected to come up with any solutions.