Dr Muhammad Khan
THE prime responsibility of the government of any state is to identify and prioritize the problems facing the state and society of that country. Identifying the problem areas at an appropriate time frame and then focusing to resolve it by all possible means on priority would save the government from complications arising later. Unfortunately the ruling elite of Pakistan have never appreciated the real problems, faced by the state and its huge population. Resultantly, they could not put into perspective these problems for their rational solutions. Today the state of Pakistan is facing serious economic crisis and the Government finds severe challenge to overcome this financial catastrophe.
For the first time in the history of Pakistan, its GDP growth has shrunk to negative 0.38 percent for the fiscal year (2019-2020). According to Global Economic Prospects Report released from Washington DC, “Pakistan’s GDP growth would continue shrinking in next fiscal year and it might touch negative 0.2 per cent of GDP in fiscal year 2020-21 against revised projection of negative 2.6 per cent for the outgoing fiscal year 2019-20. This is the actual and grim economic situation facing the state of Pakistan where provinces and institutions are unable to manage their annual budgets. Furthermore the federal budget 2020-2021 is based on assumptions and presumptions.
The current catastrophic economic crisis situation of Pakistan can be attributed to the bad governance and failure of the government and its economic managers. 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 default and for a state like Pakistan economic default means a lot. It is worth mentioning that in April 2016, the World Bank forecast GDP growth rate of Pakistan as 4.5 per cent, reducing 1% from what the Government of that time had projected (as 5.5%).
The GDP growth rate for fiscal 2017-2018 was even higher, reaching 5.5 per cent a record increase in last one decade. What has gone wrong with the GDP growth rate after 2018 and why there has been a sharp decline reaching negative growth rate. The past governments cannot be blamed, since the GDP growth rate was record high till 2018 and figures quoted above were authenticated by international financial institutions (IFIs). Then there has been very high inflation rate in last two years (2019 to 2020). 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 and reached its peak (11.12%) in 2020. In addition, poverty is all time high in Pakistan where number of poor people is increasing with each passing day as food items and other necessities of life are beyond reach of common man.
While the national economy of Pakistan is sliding downwards, there has been unprecedented and a 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 without any governmental check. 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 corruption, causing heavy losses to national economy and undesired short supply of items in the market, they stand unaccountable and scot-free. Rather in most of the cases they have further entrenched and wired themselves to suck the blood of poor masses and erode the national economy at will and with total impunity.
Similarly exchange rate of PKR versus US Dollar (1 USD=165 PKR) is highest in the history of Pakistan. It remained almost constant from 2013 to 2018. What an economic management by the government and highly qualified (indeed foreign qualified and IFIs experienced) team of current financial managers of Pakistan. The worst part of the current economic crisis in Pakistan is that this below average team of economic mangers is still being praised by Chief Executive of the state and ministers are accusing previous governments for their inefficiencies which caused financial meltdown of Pakistan.
This team of ineffectual is called as the financial think-tank of Pakistan who holds meetings almost every week, further sinking the economic ship to deep sea. This state of poor economic fall-out has reached despite huge financial assistance (loan) from the Kingdom of Saudi Arabia, UAE and many other friendly states. Besides, there has been rescheduling of the loans by IFIs owing to Covid-19. Currently, the affairs of the state are being run through heavy and agonizing taxes on poor masses whereas, the elite have not abandoned their luxurious life style. Had there been no rescheduling of debt servicing and loan facility of friendly countries, the economy of Pakistan would have further wilted. Restoration of economy on the path of economic development through immediate and revolutionary measures is most needed to avoid economic default and even for the survival of the state. The 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 elite. Therefore, let’s re-evaluate the governance system of the Government and performance of economic managers of Pakistan and replace them with apt, proficient and experienced team whose focus must be State of Pakistan and its 210 million masses.
— The writer is Professor of Politics and IR at International Islamic University, Islamabad.
