Economic management of Pakistan
THE significance of economy can be imagined from a famous quote, “Economy is the start and end of everything” for a sovereign state.
Indeed, the strong economy is the source of national strength and form the basis for acknowledgeable 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 downward trends in the economy of Pakistan since last few years.
Despite being an agrarian economy, the essential food items are rapidly getting out of the reach for over 50% Pakistani masses.
Inflation is record high and developmental sector is found wanting in all areas of socio-economic development of the state.
The educational budget of the institutions of higher education and public sector colleges and schools has been reduced to minimum level. The other sectors of Pakistan are equally facing the economic challenges.
Indeed, not the resources but the poor economic management is considered to 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 of Pakistan is to identify and prioritize the problems facing the state and society of Pakistan.
Identifying the problem areas at an early time-frame and focusing to resolve them by all possible means and through better economic management could have save the government from on-going economic crises.
But, neither the problems identified nor any serious efforts made to overcome the economic crisis, hurting the state and society alike.
Resultantly, once confronted by financial challenges, they resorted to rush to IMF for a possible rescue.
The IMF and other international and regional financial institutions then provide the finances with heavy interest rates and pre-conditions like impositions of heavy taxes and levies on to the masses.
Finance Advisor Shoukat Tarin is currently in United States, negotiating with IMF for the resumption of loan facility.
Earlier in 2019, IMF provided 39-months loan to Pakistan under the Extended Fund Facility (EFF). It was a total of $6 billion loan provided to support economic reform programme of Pakistan.
Despite this loan facility of IMF and other loans from many other states, the incumbent Government could neither reform the national economy nor did provide relief to Pakistani masses. Rather, the foreign loan has risen to $122 billion.
These are the figures of June 2021 which has further exceeded in last three months. The external debt and liabilities (EDL) were $113 billion as of June 30 2020.
In 2018, Pakistan’s external debt was $93.531 billion and $86.031 billion in 2017. These figures are sufficient to demonstrate the real picture of the Government’s economic performance.
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 is representing an uncertainty and chaos even for the next fiscal year (2022/23).
It is worth mentioning that, for the first time in the history of Pakistan, its GDP growth was negative (0.38 percent for the fiscal year 2019-2020) under incumbent Government.
The federal budget 2020-2021 was based on assumptions and presumptions and so was the engineering made with budget estimates for 2021/22. The outcome of this budget is now hitting-hard to everyone in Pakistan.
The GDP growth rate for fiscal 2017-2018 was over 5 percent then why there has been a sharp decline in 2019/20, reaching negative growth rate? In 2017 inflation rate was 4.15% which was further reduced to 3.93% in 2018. The inflation had risen to 6.74% in 2019, was at peak (11.12%) in 2020 and now again getting in double digits.
In addition, poverty is all time high in Pakistan where number of poor people is increasing with each passing day as food items and basic necessities of life are beyond reach of common man.
This is the actual and grim economic situation facing the state of Pakistan where provinces and institutions are unable to manage their annual expenditures.
Similarly exchange rate of PKR versus US Dollar (1 USD=171 PKR) is highest in the history of Pakistan. It remained almost constant from 2013 to 2018.
Indeed, the government and its economic managers responsible to manage state’s economy could neither appreciate the looming financial crisis nor took timely measures to avoid the financial meltdown of Pakistan.
Resultantly the country is heading towards an economic disastrous which means a lot for the nuclear state like Pakistan.
While the national economy of Pakistan is sliding downwards, there has been unprecedented mushroom growth of the various cartels in Pakistan.
These cartels are controlling the prices and supply of all-most all critical food items and petroleum with or without consent of the government.
In most of the cases these cartels are part of the government with sitting ministers, MPs and advisors.
Despite investigations and proofs against their deliberate kick-backs and corruption, causing heavy losses to national economy and undesired short supply of items in the market, they stand unaccountable and scot-free.
In October 2021, through a new Ordinance of Accountability they have been given total impunity to legalize their corruption and losses they caused to national economy.
What an economic management by the government and highly qualified and IFIs trained team of current financial managers of Pakistan who are busy to push the country towards economic devastation
Currently, the economic management of the state is being run through heavy and agonizing taxation system on poor masses which cannot be sustained on long-term.
In fact, the economic management of nuclear Pakistan with rivalries all around and multiple fault lines within cannot be run like a corporate company nor can it be left at the mercy of inept and non-serious economic managers.
The way forward is; a massive restructuring of the economic management of Pakistan through serious, innovative and revolutionary steps with home-grown economic managers who are well conversant with national power potentials of the state of Pakistan.
— The writer is Professor of Politics and IR at International Islamic University, Islamabad.
