People are willing to pay taxes and wait patiently to give governments time enough to improve governance provided they see tangible benefits in return for the taxes and form a perception that the team running the affairs is indeed taking the country in the right direction. There is no point beating the drum at every forum ridiculing one's own nation that they do not pay their rightful taxes or suggesting why taxation per se in Pakistan should be increased, especially in a country where the state just about provides no public support facilities. Post-independence Pakistanis have grown up in an environment where basic necessities like health, education, public transport, utilities and an efficiently functioning justice system are not taken for granted and, ironically, even no longer expected by most. Sometimes ignorance is bliss The financial solvency of Pak economy is posing a challenge like never before. On the one hand, is the recently negotiated or rather poorly negotiated IMF package (which in essence calls for the head of Pakistan's manufacturing competitiveness and developmental aspirations) to enable us to meet our financial obligations and, on the other, the ability of the present economic managers to innovate ways and means to sustain a minimum required level of economic activity and keep unemployment under check. Of paramount importance to any donor agency/institution (IMF included as it is nowadays working hard at improving its image of a global Shylock) is to ensure that any loan package also optimises of the borrower's ability to pay back. This underlying fact coupled with a rapidly changing scenario of deflating global pricing in almost all commodities should have been enough for a clever and competent negotiating team to extract much softer and people-friendly terms for Pakistan than what has presently been conceded. The hallmark of an astute manager is to read and anticipate the present and emerging scenarios in order to work out the best possible deal. Perhaps, by not factoring in the fast changing global dynamics during the course of the negotiations, we not only failed to convince the IMF but also ourselves of better alternative terms and conditions. The main argument put forward by the advocates of high interest rates in Pakistan is the urgent need to bring down the inflation level (stated to be fluctuating between 21 and 23 percent). Their logic is that with inflation hovering around the 20 percent mark the present effective market lending rate of around 17.50 percent still reflects a negative 2.50 percent and then the demand also needs to be quickly capped to slow down the economy while ensuring a soft landing. What they conveniently forget in the equation is that Pakistan historically has never had a sustained export surpluse and if exports come down faster than the imports the problems will not only compound but also carry the explosive baggage of rising unemployment. Meaning, that in such circumstances the failing monetary tool will also marginalise the supply side options in fighting inflation. Further, shrinking the economy by too much and too quickly poses multifarious other dangers such as: (1) A complete economic breakdown or collapse of the Pak economy. As once the slide starts it may become unstoppable given the overriding external factor of a worldwide recession, which incidentally is likely to peak in 2009. (2) The economy may shrink to a level where the foreign debt portion simply becomes unserviceable. Those in the corporate sector will appreciate this better than others where they have to maintain a certain minimum level of turnover to ensure the servicing of their long-term borrowings. (3) Markets and opportunities once lost may not be possible to regain. (4) Massive unemployment can lead to social unrest and diminished nationalism. Care also needs to be taken on how we measure inflation. Again we will be rather nanve to keep on taking nine months or annual averages (the way IMF measures it) because these are unusual times where oil, grain and other commodity prices have shed more than 60 percent to 75 percent of their respective values in less than a quarter. So, a prudent approach would be not to go back further than three months and keep a provision for the deflationary trend when arriving at inflation projections. Another approach could be to assess it with the historical comparison data with neighbour India. It tells us that in the last decade the inflation index in Pakistan has on average been about 5-6 percent higher than that of India. With India now talking about a single digit inflation level in January 2009 and in fact going ahead with reducing interest rates and taxes, this means that our real inflation should not exceed the 15 percent mark provided we do not play havoc with the supply side. Sadly though, the present handling of economic affairs do not inspire much confidence, neither at home nor abroad. The manufacturing sector is starved of energy (be it gas or electricity) at the expense of non-productive cum politically motivated gas connections, needless CNG stations and misplaced priority on fund allocation that in recent days has seen closure of thermal power stations on account of non-payment of dues. This has resulted in an inadequate working capital for them to run their operations. The cost of production in Pakistan continues to climb rendering our industry uncompetitive and the possibilities of an export led growth a distant reality. With the new State Bank Governor now also coming from the infamous Citi clique, let us hope that together they realise that for any institution, to survive its core productivity and production cost need to be in order. The world has just seen icons like GM, Ford and Chrysler stumble just because they are not able to match their competitors in terms of cost of production. According to Forbes, cost per hour comparison in producing cars reads as under: Ford: $70.51; GM: $73.26; Chrysler: $75.86; Toyota, Honda, and Nissan: $48.00 Every time democracy gets rocked the transition back eats up valuable years. The price that the country and its people have to pay for this is no longer affordable and that is why we have to ensure that the current democratic dispensation survives and delivers. However, for this to be possible it is the very people in the driving seat who need to get their act together and that also 'Quickly'