THAT the government should have long before brought the parallel economy into the formal sector goes without saying, but that this would only be done because the economy in the formal sector could not sustain the increase in deficits caused by the war on terror reflects the inefficiency of the government in collecting the expenses of the war from the powers on whose behalf Pakistan is fighting it, despite a national consensus against it. The deficits are caused by the unreasonable delays imposed by the powers on whose behalf the war is being fought in making the payments they had promised. The government is scurrying to the IMF, from which it has already got a bailout, to seek approval for those measures. This plight shows how the West fights wars on credit. First, it does not make its payments on time, delaying them unreasonably, and then it uses the World Bank to impose unfair conditions on states to back up its political measures with stringent conditionalities. The states, like Pakistan, who had counted on, but not received, money from the Western powers, are unable to meet those conditionalities, and gain a reputation for poor economic management in addition to paying the cost of others wars. The government should have worked on the informal economy earlier. Business has to weigh up the benefits of remaining in the informal sector (such as remaining outside the tax net) against its costs (getting caught, not being allowed to do business with government organisations and so on). Apart from the ease of GDP accounting, bringing this sector into the formal economy would mean bringing them into the tax net. The government is planning measures to be announced in the coming Budget for 2010-11 that will make it beneficial for business to move from the informal sector to the formal. Taking such measures to the IMF might seem to make sense, but one of the prerequisites of such schemes is secrecy, which will be compromised if the schemes are shared with any individual outside the ministry, let alone outside the country, as is planned now. The State Bank Governor and the PMs Finance Adviser are going to the USA to get what amounts to approval for next years budget. They should realise that this depends not so much on economic performance or expertise, as on political compliance. Therefore, the Finance Ministry team should add its voice to the necessary change in policy, which would bring the government in line with the people, and stop the country having to submit its budgetary measures to foreign approval beforehand.