A plea for mercy on the nation
THESE days, Pakistan is suffering from some of the most severe financial problems that despite all efforts, it seems difficult to get out of it in the year 2023.
These days, Pakistan is suffering from some of the most severe financial problems that despite all efforts, it seems difficult to get out of it in the year 2023.
Controlling the recent rampant rise in inflation, paying off massive foreign debt, increasing exports and implementing the National Savings Program are no less than a challenge for the government.
In such circumstances, maybe a miracle happens, then the situation can improve, otherwise, the current economic situation and challenges are in front of us like a hungry dragon.
AKD Securities Company, the most well-known and largest brokerage house of Pakistan at that time, has stated in a recent report that political uncertainty and the economy in Pakistan seem to be directionless and the government of Pakistan has no plans to reform the economy.
There is no solid plan. Of course, at this time, Pakistan is diving into the deepest sea of political crisis along with economic problems and on the other hand, terrorist organizations have also created numerous problems.
The people of Pakistan are suffering the consequences of this whole situation. It is clear from the government’s statements that in the near future the people will be sacrificed once again as usual.
Pakistan has to pay off debts of 23 billion dollars in the current year i.e.2023 and about 9.5 billion dollars will be required to meet current account expenses.
In this situation, the foreign exchange reserves with the central bank have remained only 5.8 billion dollars.
It can be estimated that the government has to meet 27 billion dollars this year from anywhere.
That is, even if the government has to sacrifice honour, respect and Pakistani people for it. During the last 12 months, the foreign exchange reserves have decreased by about 12 billion dollars.
Thus, in the current financial year, the payment of foreign loans and the very low reserves of foreign exchange have sounded the alarm.
The government experts themselves are showing the possibility that no substantial increase in foreign exchange reserves is possible in the current financial year.
This year, exports, remittances from overseas Pakistanis remain low, and foreign investment is also gradually decreasing.
According to economists, looking at the current economic situation, there is a fear that the value of the rupee will decrease further and one dollar will be around 260 rupees at the end of this year.
Inflation is therefore expected to rise to 25 percent by the end of the year, prompting the State Bank to raise interest rates further, likely to reach 18 percent from 16 percent.
Businessmen will face more difficulties to run business in such high interest rate which may come in the form of more unemployment.
Food shortage is another major problem in the Pakistani market. The conditions created by the floods have pushed the country to the brink of a humanitarian crisis as well as a food crisis.
The prices of pulses and other commodities including flour are continuously increasing in the market and the living system of the poor people has been badly affected.
A separate estimate for flood damage is $16 billion. In addition, the growth rate in the country is expected to be several times lower than the estimates due to which more people are expected to fall below the poverty line due to the decrease in per capita income along with the increase in unemployment.
The federal government on Tuesday presented a plan to reduce energy imports under which business activities will be closed at 8 pm and marriage halls at 10 pm.
The government hopes that the implementation of this project will save more than 200 billion rupees.
According to experts, this is only self-consolation as this mountain is not going to fall from the pits.
More than this, the expenses are incurred on the official luxuries of the government ministers.
Saving is impossible until the government ends its luxuries. All diplomats from foreign countries visiting Pakistan have expressed surprise at the fact that how the rulers of a country, who seeking economic support from the world, are adopting a luxurious lifestyle.
I don’t know how much Pakistani people will cry over their misfortune? The government now needs bold decisions to rationalize economic policies, but it will not be able to do so as the ruling party is currently eyeing the upcoming elections.
However, if the government is really serious, there is an urgent need to negotiate with the creditor countries to reduce the risk of bankruptcy and make debt repayment easier.
AKD Securities Company has also expressed the same view in its report that for economic stability, Pakistan should immediately complete the ninth review with the IMF and restore the loan program, because participation in the IMF program will help in efforts to attract funding from other financial institutions.
It should be noted that at present the IMF is demanding Pakistan to release the currency on the market, impose new taxes to cover the revenue losses, increase the electricity and gas prices to reduce the revolving debt, on which the government seems hesitant.
To reduce the fiscal deficit, there is no option but to cut down on government spending. Concrete measures have to be taken to eliminate circular debt in the energy sector and there is an urgent need to bring the non-tax paying sectors into the tax net.
Better competitive environment should be provided to industries to promote exports instead of running on subsidies.
The models that Pakistan-based industries operate on require fixed margins, government subsidies or tax exemptions.
In such cases, economies do not flourish and they are always in need. The burden of external debt of 97 billion dollars is a threat to the central government, to deal with which the government needs to work on the Singapore model.
Singapore lacked natural resources, so it turned to financial services as a source of income, while another example can be taken from neighbouring India, whose IT exports alone are expected to reach $170 billion this year and on this side, Pakistan is exporting IT worth only 2.6 billion dollars this year.
However, Pakistan has cheap labour available and IT exports can easily be increased to 10 billion dollars, but the government will have to be serious for all these.
The current ruler seems to be more interested in the game of politics than the economic reform of the country.
Please stop playing with the future of the nation. Due to severe inflation, unemployment and chaos, the people have started to be destroyed both economically and morally.
The nation should be spared now and the government and the opposition should come together and come up with a solid economic policy.
—The writer is associated with the news reporting department in Islamabad for a long time and working for an international news agency.