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Pakistan's new government faces one of its toughest economic challenges next Tuesday as it unveils its first annual budget that seeks to reconcile a number of difficult issues.
Battling an economic slowdown, a rising fiscal deficit, pressure to sharply raise the domestic energy prices and above all meet popular expectations, are all at the centre of the government's economic radar screen.
The political turmoil of recent weeks has not helped in lifting the economic trends, amid major losses on the Karachi stock exchange while the Pakistani rupee has lost significant value since the beginning of this year.
But the most difficult element within this emerging picture is Pakistan's current political challenge. The ongoing tangle between key players in the newly elected government and president Pervez Musharraf has only vitiated the overall atmosphere.
Ongoing infighting between these key players, has only given jitters for the stock market and the main business players.
The markets have recently fallen significantly because of widespread and fast growing worries over Pakistan's political future and the virtual absence of a policy direction.
For many investors, the prospect of an era after Pervez Musharraf's tenure ends, is simply an emerging period where economic policies would be more than likely to go off track.
Already, the combative attitude adopted by former prime minister Nawaz Sharif who is eager to see the removal of Musharraf has unleashed widespread anxieties.
Sharif was removed as prime minister in a military coup in 1999 led by Musharraf in his former position as chief of army staff. Sharif subsequently spent years in exile in Saudi Arabia before returning to Pakistan in October last year. Today, Sharif appears eager to settle scores with his old political foe.
As long as Sharif and others who adopt his line of argument continue with such bravado against Musharraf, Pakistan's overall atmosphere is going to suffer and the business community will remain unnerved.
Inherent ties
Politics and economics are inherently tied together in a close way. But political influences coming to hound economic trends is essentially something that just doesn't help the outlook for the stock market and the financial markets.
The sooner the new government works to shift its focus away from intense political rivalry, the better that would be in its own interest.
In the days ahead as the new government prepares the budget, it is possible that it may decide to look at a number of new ideas to either impose fresh taxes or return taxes that were abolished in the past.
Recently, there were rumours that the government is planning to revive the old so-called wealth tax. This is the tax which was abolished in the 1990s under protest from many taxpayers who typically found themselves exploited heavily by tax collection officials.
The argument against the wealth tax was that it targeted wealth accumulated by individuals rather than following a more equitable route of just taxing income by individuals.
Years later, the big challenge for Pakistan has in fact been that successive governments have failed to change the powerful reality of just below one per cent of Pakistan's population paying an income tax.
Consequently, just concentrating on slapping new taxes or reviving old ones would not help tackle the mounting fiscal problem.
The moment is long overdue for Pakistan to consider uniting the country politically while elected leaders prepare themselves first to share the burden.
The government needs to concentrate a lot more on revamping the existing tax collection system and improving its performance.
The writer is a journalist based in Pakistan.
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