Averting the economic melt-down of Pakistan
WHILE there have been visible indicators of economic down-fall in Pakistan over the last three years, the governments did not take needed measures to control it.
Only on 18 May 2022, Prime Minister Shehbaz Sharif announced ban on the import of luxury items.
Nevertheless, the policy still remains ambiguous and yet to be seen for its practical implementation.
The relevant question is why this step was not taken in the last over three years despite clear indicators of gradual economic down-fall.
One of the reasons for the devaluation of Pakistani Rupee compared to USD is hefty and uncontrolled import of costly items which are being used by 5% rich people of Pakistan (the elite class).
These imports are generally out of the reach of over 95% masses of Pakistan. Whereas all imports are done in the US Dollars, the outcome is a short-fall of dollars which caused further devaluation of Pakistani currency.
The devalued Pakistani Rupee impacts everything in the country, making the life miserable for the poor masses.
A simple calculation would reveal that 5% elites (rich people) of Pakistan are responsible for causing the devaluation of Pakistani currency which badly impacts the life of 95% middle and lower middle class of Pakistan.
Indeed, the last few years have added an extreme poor class in Pakistan, who finds it extremely difficult to have two-time bread in a day.
Whereas, it was not expected from the ruling class to identify the real causes of economic crisis in Pakistan, unfortunately, neither the media, nor the economic experts ever tried to apprise the masses about the true story of the devaluation of Pakistani currency and the looming default-like situation, facing the state of Pakistan.
The PTI Government was warned by the experts of economy to take measures and avoid economic melt-down of Pakistan, but its Captain kept on changing the Finance Ministers and economic teams without any prudence and a sound economic policy.
In its over three and half years, the PTI Government couldn’t even diagnose the causes of this gradual economic melt-down which has brought the state closer to an economic default today.
Yet, it is campaigning to come back through another managed election process. Look at the strategy; they are using to befool masses, hide aspects of their bad governance and massive economic losses to Pakistan.
Pakistani masses understand that “Economy is the start and end of everything” for every sovereign state.
Indeed, the strong economy is the source of national strength and form the basis for a knowledgeable and resilient work-force of a nation.
In a highly globalised world, the significance of economy is further enhanced since it impacts the international relations among the nation states from the perspective of foreign policy, trade and security cooperation.
Unfortunately, despite heavy taxes and exceptionally high levies on all goods and utilities in Pakistan, there are clear indicators of economic melt-down of Pakistan.
This state of affairs has reached despite Pakistan being an agrarian economy. Indeed, not the resources but the poor economic management is considered to be the real cause of deteriorating economy of Pakistan and falling living standards of its 122 million population.
In fact, the basic responsibility of the government was to identify and prioritize the problems facing the state and society of Pakistan.
Identifying the problem areas at an early time-frame and focusing on resolving them by all possible means and through better economic management could have saved the government from on-going economic crisis.
But, neither the problems identified nor any serious efforts were made to overcome the economic crisis, hurting the state and society alike.
Resultantly, once confronted by financial challenges, they resorted to rush to IMF and some friendly states for a possible rescue.
Though the GDP of the country has been estimated to be over 3 per cent for the fiscal year 2021/22 yet the economic state of the country represents an uncertainty and chaos even for the next fiscal year (2022/23).
The GDP growth rate for fiscal 2017-2018 was over 4.5% which means it was better economic management until 2018.
The exchange rate of PKR versus US Dollar is almost 1 USD=200 PKR, unbelievable, highest in the history of Pakistan.
It remained almost constant from 2013 to 2018. In order to save the country from economic default, the incumbent Government must ban the import of luxury items immediately.
Besides, all ministers, bureaucrats and all government functionaries must be directed to ensure austerity measures even within their authorized perks and privileges.
The huge fleets of vehicles with heavy POL consumption must be reduced to minimum and luxuries of the officials must be stopped forthwith.
If despite alarms, the Government officials still opt to have luxurious way of life, then the Government must reconcile its way of governance.
The Government must stop the policy of political appeasement; bring stability and a state of certainty in the country.
PTI leadership must be asked to stop polarizing the society by creating chaos and uncertainty through hate and violence speeches.
The national institutions must play a decisive role towards stability of the country by ending the chaotic situation.
Indeed, we are left with no time to avert the economic melt-down of Pakistan by taking strict economic measures.
— The writer is Professor of Politics and IR at International Islamic University, Islamabad.