Can Pakistan get out of the current economic crisis? | By Dr Atiqur Rehman


Can Pakistan get out of the current economic crisis?

IN today’s most difficult economic conditions, every responsible citizen wants to know why the current economic situation has happened; is there a way out of this situation, and if so, what role can an ordinary citizen play in it?  Here are some simple answers to these questions. The first question is, how the current situation developed. To understand the answer, consider the following facts

(a) During the first 7 months of the current fiscal year, Pakistan’s exports were recorded at $16.43 billion, while remittance receipts were $16.61 billion. In total, the inflow of dollars was $33.04 billion. (b) During these months, outflow of dollars due to imports was recorded at $33.45 billion, thus the current account deficit was only 0.42 billion dollars, which is 94% less than the corresponding period of the previous fiscal year. (c) In the above-mentioned period, there was 7% decrease in exports and 8% decrease in remittances, compared to the previous financial year. If either of these two had maintained their previous year’s volume, the current account would have been in surplus

In normal circumstances, with a deficit of only $0.42 billion, such a huge fall in foreign exchange reserves and such a bad deterioration in balance of payments should be very unlikely. A large economy like Pakistan should not have to worry about such a small deficit. But the debt servicing was the root cause of difficulties in balance of payments. During the said period, Pakistan spent more than $10 billion on foreign debt repayment.

In normal circumstances, obtaining a new loan on repayment of the existing loan happens to be quite easy. If the loan transaction was continued as usual, such difficulties would not have arisen. But the No-Confidence Move and termination of government negatively affected the perception of the outside world about Pakistan’s political system.  The friendly countries and international financial institutions have given Pakistan a very tough time to issue new loans, which is why such a difficult situation has emerged.

In the contemporary world, the continuity of the policy is extremely important for the trust and confidence of international institutions and friendly countries. The main reason for the problems of the people is the political instability and doubts about the continuity of the policies and this political instability is also one of the main causes of the current inflation and unemployment. Now coming to the second question, is there an opportunity to get out of the current situation? To understand this, keep the following facts in mind.

(a) During the first seven months of the current fiscal year, Pakistan imported commodities worth $7 billion for which all the inputs are available in Pakistan. This amount translates into PKR 1820 billion. These commodities are still being produced in Pakistan and all the resources for their production including manpower, technology and all the required equipment are present in Pakistan. But their production fell far short of domestic demand which led to imports of these goods. Pakistani imports during the current fiscal year includes cotton, wheat, vegetable, fruit, edible oil, textile products, pulses, etc. If these goods were produced locally instead of imports, not only foreign exchange would be saved, but millions of people would also get employment in the production of these goods.

From cultivation of agricultural commodities to harvest, there is a difference of just a few months. If crops of edible oil are cultivated today, it is possible to obtain yield from the crops within six months. Therefore, if due attention is paid to the production of these agricultural commodities, not only a surplus current account is possible, but it is also possible to repay the loans. But for this purpose, agriculture needs very serious attention. If we start production of a crop in an area previously used for another crop, the production of the previous crop may reduce leading to imports of that crop resulting in import of the second commodity.  There is a need to utilize such agricultural lands on an emergency basis which are not yielding any production at present. There is also a need to upgrade the marginal lands and to increase the yield per acre.

Other major imports of Pakistan include petroleum, natural gas and their products. It is not possible to eliminate the import of these goods, however, it is possible to reduce their imports. For this purpose, we need to focus on alternative sources of energy, especially on biogas and other biological sources. Biogas is such a source of energy that if the project is started today, it is possible to generate energy within just a couple of weeks. Each small and large biogas project will save dollars and will reduce dependence on imported gas and fuel.

Now we look for the answer to the third question, what role the common man can play in improving the economic situation. My proposals in this regard are as follows: (a) Prefer Pakistani products even at the cost of quality, (b) If you own an agricultural land, never leave it idle. In current circumstances, leaving agricultural land idle is a national crime, (c) Start kitchen gardening and save money for your home, it will also reduce the demand for imports, (d) If you have organic waste in your surroundings, install a biogas plant. This can meet your gas and electricity needs in an environmentally friendly way (e) Invest the surplus money in some industry or agriculture instead of real estate and finally I request to highlight the positive aspects of the institution, region and country you live in, and avoid promoting the negative aspects. Especially unconfirmed and funny memes, hurting the repute of your nation must be stopped. By promoting a negative aspect, you are part of a crime of spreading a negative image of your country, and if the content of such promotion is also false, then you are guilty of the two crimes, perjury and false promotion of the country.