PB 13 06 2013
Thursday, 4th Shaban 1434 AH 13/06/2013 CE N0: PB13062
Press Briefing
Briefing regarding IMF’s budget for Pakistan
Kayani-Sharif regime parrots IMF demands and calls it a “national” budget
Respecting members of the press! Asalaamo alaykum
The Media Office of Hizb ut-Tahrir in
))ادْعُ إِلِى سَبِيلِ رَبِّكَ بِالْحِكْمَةِ وَالْمَوْعِظَةِ الْحَسَنَةِ وَجَـدِلْهُم بِالَّتِى هِىَ أَحْسَنُ((
“Invite to the way of your Lord with Evidence and Fair Exhortation and argue with them by that which is better.”
[Surah An-Nahl 16:125]
Respecting members of the press!
Regarding the three major pillars that are destroying Pakistan’s economy, they are mentioned in IMF Report 12/35, where it is stated that, “Main policy recommendations: Urgent policy action is needed on three fronts, to contain vulnerabilities, and to place Pakistan on a higher, inclusive growth trajectory: (i) strengthen public finances through revenue mobilization, cuts in wasteful and low-priority expenditure, and a strengthened fiscal decentralization framework; (ii) reform the energy sector to reduce power shortages and the large untargeted electricity subsidies, and more generally reduce the government’s footprint in the economy; and (iii) implement financial policies to reduce inflation, protect the external position, and safeguard the stability of the financial sector.”
So, dear brothers and sisters, the IMF’s three pillars are: crippling the power sector by privatization and ensuring more expensive electricity, increasing taxation to choke
First IMF Pillar: Crippling power sector by privatization
As for increasing privatization of the power sector to guarantee load shedding and unaffordable electricity, Ishaq Dar said in Paragraph 8 of his Budget speech, “A government too occupied in carrying out business activities that can best be done by the private sector through a market mechanism is indeed a prescription for distorting the entire economic system and creating inequities in its functioning” and he said in Paragraph 11, “Prime Minister will soon announce a comprehensive plan to incentivize and encourage further investment in energy projects in Pakistan.”
Respected members of the press, privatization raises electricity prices so that the private owners can profit in their business. So, whilst private owners amass huge wealth by owning electricity resources, the rest of society is stricken by increasingly un-affordable energy prices. In addition, regarding the electricity shortages, the government itself fell into debt to these private interests to the order of billions of Rupees. So, to maintain profits in the face of the government withholding payments, the private interests were compelled to reduce production. This “circular debt crisis” is the reason that only 10,000 MW or less electricity is being produced. This is even though the total installed capacity is 19,855 MW, dropping to 15,150MW at times of low river flow, against a peak demand that varies between 11,500 MW in the cooler months up to 17,500 MW, during the peak of the hot summer. All this is the result of making electricity a business and not a right for the people. And this privatization of the electricity sector will continue under Kayani-Sharif regime, just as it did under previous governments.
Privatization of electricity contradicts our deen. Islam ensures the distribution of wealth and one of its mechanisms is the public ownership of electricity resources as well as coal, oil and gas. These resources are neither owned by the state nor individuals. Instead, the state administers such resources to ensure that its benefit is used for all the citizens. RasulAllah صلى الله عليه و سلم said,
الْمُسْلِمُونَ شُرَكَاءُ فِي ثَلَاثٍ الْمَاءِ وَالْكَلَإِ وَالنَّارِ
“The Muslims are partners in three things, waters, feeding pastures and fire”
(Ahmad)
The Khilafah will abolish taxes upon power and fuel which have further greatly inflated their prices far beyond the cost of extraction, refinery and distribution. Any profit from sales to non-hostile non-Muslim states will be put to use for taking care of the public's needs as it is the public’s property. Thus Islam’s treatment of public property will be a means of great comfort for the Muslims.
Second IMF Pillar: Increasing Taxation to Strangle the Economy
As for increasing taxation, Ishaq Dar endorsed this heavily in his speech as a loyal service to the IMF. In Paragraph 8 of the Budget Speech he said. “(4) Fourth, all segments of the population must share the burden of resource mobilization for running the government. The culture of exemptions and concessions must end to build a self-reliant economy.” And in Paragraph 11 he said, “(2) Raising Tax Revenues: I will lay down tax policy and specific measures.” Then in Paragraph 45 he assured crippling of increases in taxation, saying, “The earlier PML (N) government raised Tax to GDP ratio to 13%, which was the result of simplification of tax laws, making taxes broad based, plugging loopholes in the system and holding tax machinery more accountable… The focus of the budget 2013-14 is improvement in Tax to GDP ratio finally reaching to 15% by 2018.”
Respected members of the press, taxation of our people is constantly being increased as a proportion of the total revenue, by the IMF. In 2011-12, the government extracted Rs. 730,000 million in income taxes alone, which is more than the entire revenue collected in 2002-3.This has meant that the labour force, blue and white collar workers are facing ever greater hardships, with increased taxation eating away at their wages. Moreover, in the 2012-13 budgets, the government is now chasing a target of a staggering Rs. 914,000 million. Consider also sales tax that has swollen from 9% to 43% of the state’s major taxes. It is this sales tax that has made buying food, inputs for agriculture and industry unbearable for people, choking their ability to contribute to the economy and secure basic needs. In 2011-12, the government extracted Rs. 852,030 million in general sales taxes and in the 2012-13 budget, the target is Rs. 1,076,500 million. And the Kayani-Sharif regime has now declared matters are going to become even worse.
Respected, members of the press, rather than referring to IMF documents for economic policy, the Khilafah mandates implementation of the Shariah laws, derived from the Quran and Sunnah. This strangling by taxation contradicts our deen. Islam does not rely on taxation on income and consumption as virtually the sole means to generate revenue. Its revenue generation is based on accrued wealth beyond the basic needs or upon actual production. Even when the Khilafah does tax, it is with stringent conditions that are based upon accumulated wealth, so it does not penalize poor and under-privileged who are unable to secure their basic needs. And this is asides from the huge revenue that the state will generate from state owned and publicly owned enterprises such as energy resources, machinery and infrastructure manufacture, for example through sales to non-Muslim non-hostile states. Industry and agriculture will thrive in the Khilafah. They will not be strangled by taxes for all manner of crucial inputs, from energy and fertilizer to heavy machinery and engines. Instead, the state will generate revenue from profits of the trade and accrued trading merchandise or the land production. This allows the agriculture and industry to focus on production without fetters, whilst circulation is ensured through their giving of revenues from their profits or accrued wealth. Moreover the abundant revenues stipulated by Shariah prevent the need for the interest based colonialist loans, which has meant that
Third IMF Pillar: Ensuring inflation by weakening the Rupee
Regarding inflation, Ishaq Dar accidently connected inflation with its cause, the weakening of the Rupee, whilst not even addressing how to maintain the currency’s strength and end inflation form its roots. He said in Paragraph 5 of the speech, “(2) The inflation has averaged around 13%, which is unprecedented in the last four decades; (3) The exchange rate was around Rs.62/$ and it now stands at about Rs.100/$ depreciating by a whopping 60%”
The fall of the Rupee is the colonialist policy of heavy borrowing from the central bank, which is called “monetizing” the deficit. Because this method always leads to the growth of monetary base and of money supply and ultimately inflation, it is often referred to as just “printing money.” Not only is this weakening of the currency the cause of damaging inflation, it contradicts our deen, respected members of the press. Islam has mandated that the currency of the state is backed by precious metal wealth, ending the root cause of inflation, by building the currency on a powerful foundation. RasulAllah صلى الله عليه و سلم commanded the Muslims to mint Gold Dinars, weighing 4.25g, and Silver Dirhams, weighing 2.975g, as the currency of the state. This is why the Khilafah enjoyed stable prices for over a thousand years. Return to the gold and silver standard for Muslims is eminently practical. The lands of the Muslims in which the Khilafah state is likely to arise contains a lot of gold and silver resources, such as the Sandaik and Reko Diq fields in Pakistan
So, respected members of the press, it is upon you now to convey Islam as is its right, so that you play your role in securing the return of the Khilafah.
وَمَا عَلَيْنَا إِلاَّ الْبَلاَغُ الْمُبِينُ
(يس: 17(
. “There is nothing upon us except to the clear conveying.
[Surah Yaseen 36:17]
Asalaamo alaykum,
Media office of Hizb ut-Tahrir in