Shah Fahad
FOR several years people of Pakistan have been suffering from tough austerity measures. When the light at the end of the tunnel began to enlighten the path to economic recovery, the Coronavirus wrapped the whole world in its tentacles. Labourers especially the daily wagers have suffered the most from the lockdown. According to the IMF analysis, Pakistan will face a massive deficit of Rs 4 trillion due to the shrinking economy and falling tax revenue. The development budget will be slashed because the economy is expected to contract by 1.5%. As stated by the Federal Minister for Industries and Production, Hammad Azhar, export orders worth $2 billion are still pending due to the lockdown. Both the IMF and the World Bank have projected that for the first time since 1950 the real GDP growth of Pakistan will be negative.
Federal and provincial governments specifically asked businesses not to lay off their employees during the lockdown and to facilitate the business SBP also introduced special financing. However, according to a recent survey of Free and Fair Election Network (FFEN), 26% of female workers from their sample were laid off. The survey states that among those female workers, who were surveyed, 14% were permanently laid off and 12% were temporarily suspended. A painful fact that was highlighted in the survey report was that 51% of the workers are still waiting for their dues to be cleared even after being terminated from the job. Similarly, according to the estimates of the Pakistan Institute of Development Economics, 18 million workers will lose their jobs due to the lockdown and it will end up pushing approximately 71 million people below the poverty line.
Those workers, who are coming back to Pakistan from the Gulf States due to the non-availability of work, might not find their way back and that will increase the unemployment. A ripple effect will decrease the foreign remittance flow. Domestic abuse cases also witnessed a rise during the lockdown. As the saying goes that a poor man can only afford pulses but that does not seem right in these times. Figures issued by the Pakistan Bureau of Statistics, states that the price of pulse moong witnessed a 101.1% increase and pulse masoor 47.6%. The price of basic food items like potatoes jumped by 92.26% and onions 40.72%. With these figures, one can imagine the degree with which the pocket size of the poor has shrunk.
As reported by NAB that wheat worth more than Rs.5 billion was stolen from different warehouses in Sindh. Around Rs 10 billion were recovered in wheat scam reported earlier. The food department was also involved in the theft of wheat from the warehouses. These incidents result in artificial shortage and drive the prices of such an essential commodity high, which further exacerbates issues for the poor. Lockdown measures during the virus outbreak in Karachi seemed like a joke. Major markets, which are the source of living for millions, were closed but many small markets remained open. Trader Associations were not consulted during these times. The provincial government continued its criticism of the federal government.
Morgan Stanley Capital International (MSCI) will scrutinize Pakistan’s emerging market status this month and there are fears that Pakistan might face a downgrade. If it happens then that will also adversely affect the economy of Pakistan. With shrinking demand, negative economic growth, rising external debt, increasing political instability and deteriorating global peace scenario, Pakistan might face a perfect storm in the coming months. Repayments on external loans from international institutions will require reserves, which might also deplete due to low exports. With decreased tax revenue and high deficit, the government will be unable to support the public benefit programs or subsidies.
Instead of political point-scoring, opposition and the ruling party should focus on social welfare. International institutions will have to cancel the loans otherwise; many countries along with Pakistan will not be able to service their debts in the near future. It is high time for the recovery of the looted money from the corrupt. Our honourable courts should ensure that the punishments in the corruption cases are exemplary. It is time for the multinational companies to offer their services towards society from where they made tons of money in the past. We will need all hands on deck to sail this ship safely through storm we are about to face.
—The writer is a Karachi based freelance journalist.
