The notion of a carbon-tax must have sent a chill down the spine (if available) of every carbon based life-form in Pakistan. Although Mr Zardari may have preferred otherwise, its application will actually be less pervasive and more modest, applying only to petroleum products. Ridiculous though this levy is, its existence betrays a glaring fact - Pakistan faces a significant fiscal deficit that the IMF has demanded be remedied as soon as possible.

When people talk about the nation’s bankruptcy, they do not jest. Pakistan cannot pay its bills. Shamefully, our leaders out-do themselves in their profligate spending. Their performance would leave Imelda Marcos in the dust grasping for her credit card. Worst still, as an encore, they then jet cap-in-hand across the world. Although they may point to the global credit crisis, we never see other world leaders begging for scraps. Neither does their equivalent of our ‘Friends of Pakistan’ forum turn into a nauseating version of Live Aid (but without the music).

As an energetic nation of 170 million, it may seem odd to outsiders that Pakistan would have to resort to such cringeworthy behavior, but that would be because they are not acquainted with our illustrious politicians. Ever-reckless, never-cautious, these spendaholics have spectacularly widened the fiscal deficit to 4.9% of GDP. Now the usual Keynesian excuse is being peddled that even more spending is needed to ‘offset the slowing economy’ dressed up in fancy jargon such as ‘counter-cyclical-adjustments’. Funny how that works. Our politicians must be salivating at the thought of all that money trickling through their sticky fingers.

No significant intervention would be needed if our socialist government wasn’t hell-bent on oppressing the private sector. The shenanigans of our political classes have left the growth generating middle classes reeling, so much so that growth has collapsed from 6% to a pathetic 2%. Let’s be clear, no matter how much it spends, no government can generate real economic growth - the kind of growth that comes with enterprise and effort - it can only redistribute. Economic growth comes though private business. Redistribution is fine, but we need to create the wealth to redistribute first, and no, a measly 2% will not do.

We have a deficit because our obligations exceed our tax intake. It means we are living beyond our means. To correct this, we need to curtail wasteful spending and finally realize who actually pays taxes in this country. Yep - businesses and entrepreneurs. If we concentrate on building up the private sector we can steady the fiscal ship and accelerate growth. A sustainable 10% rate is achievable at the very least. This means strengthening property rights, reducing regulation and just generally getting the government’s tentacles out from where they don’t belong.

Meanwhile, because we fail to realize and reform, we must resort to the insidious IMF (read USA). Now that they have our great nation on the end of a short string, our ‘benevolent’ pay-masters have agreed to raise the deficit target  - this being one of their conditions for assistance. Patting our leaders on the head, they graciously noted last week that Pakistan remained on track to fulfill all conditions under their Faustian pact. To which a punch-drunk nation replied - uhhh - thanks?