Crack of doom
WHAT we are witnessing in Pakistan is something similar to the wars of Seth and Horus from Egyptian Mythology. Some people believe that Imran Khan is Seth in this story because he is what is wrong with this country, be it the financial troubles or the moral dilemmas that are upon us.
Others consider him the rightful heir to this throne. Instead of achieving a consensus rather than a disputation, we are slipping deep into this whirlpool. If you talk to a businessman, he would tell you that his business is suffering more than it suffered during the COVID lockdowns. Factories are closing down, people are being laid off from their jobs, trade finance is frozen, the law and order situation is constantly deteriorating, and inflation is skyrocketing. It has come to a point where the finance czar is requesting philanthropists to help them raise several billion dollars. Reportedly these funds will be raised for five years and used to clear import bills.
Amid all these crises, Seth and Osiris are fighting for the throne as if they hold the secret that could turn this barren land into amazon. Never have I ever heard of them coming up with a concrete economic plan with workable solutions. Let’s leave the statistics and take a simple hypothetical scenario, a person is in a debt trap, his income is less than his expenses and he has to borrow money to pay his previous debts and cover his income gap.
The way out of this debt trap isn’t in debating innovative ways to borrow money but to put wheels under a workable plan to generate alternate sources of income. On the contrary, some people take pride that Imran Khan can pull off one fundraising and solve all the issues or Ishaq Dar can use his goodwill and can get his hands on some breadcrumbs for us. What is the long-term plan here? We are in no condition to discontinue the IMF program but where are the structural changes that we need to survive in the long run? Or are we planning to do what we have been doing for decades?
The major stumbling block is the fear of political costs associated with the right economic decisions. We take two steps forward and then three backward. On top of that we are reliant on capital-intensive sectors. When the global demand fell for textiles, the Ukraine conflict started, shortage of gas and inflationary pressures mounted, and our textile sector was crippled. When our exports fell we did what we always do, ban. We halted imports, hampering economic activity. Still, we don’t have any juice, containers are stuck at the port leading us to a highly precarious situation.
We are bleeding dollars in energy and debt servicing. That we can’t ban or stop. Instead of putting all our eggs in one basket, we could have diversified our portfolio when we had the chance. If not, then at least we should have gathered agricultural researchers and worked on alternate farming techniques, like hydroponics.
We could have at least shifted our reliance from water-intensive crops, and worked on improving our yield per acre. This would have allowed us to ensure a steady and affordable food supply during these crises. Similarly, we could have invested in producing skilled labour, especially in IT, improving the quality of the freelancers we are producing. That would have brought foreign exchange. Document the undocumented sections of our economy, and improve our tax collection. Improving our ranks in ease of doing business and ensuring governmental support for foreign investors.
Constant political instability puts the IMF in a situation where they have to come up with tough conditions to move forward. Then for political points scoring, the IMF is painted as a monster, but in reality, we are responsible for this mess. This situation was inevitable, the only issue is that we were not prepared to face the music.
Even after the crack of doom, there are no signs of serious restructuring or long-term financial policies. We may get ourselves a bailout this time but six months down the line, the situation will be even worse. We might be drifting into stagflation, high unemployment, rising prices and no growth. Getting out of this whirlpool isn’t easy but it’s up to us to do something about it. There will be much bigger fish to fry for the cynical Horus and Seth if they don’t show fervent behaviour in coming up with a feasible financial solution for this country.
—The writer is contributing columnist, based in Karachi.
