Political conflict cause of economic crisis


The conflict between political elites, external debt burden, and corruption is identified as the main reasons for the economic slowdown, which implies very limited policy options for economic progress. This was concluded in the panel discussion at the University of Karachi, which was jointly organized by the Applied Economics Research Centre (AERC) and the Social Policy Development Centre (SPDC).

The event was attended by a large gathering of academia and the general public. The panel discussion’s main objective was to identify the policy choice during the current economic crisis.

Earlier, the Director AERC Dr Nooreen Mujahid in her opening remarks stated that the current economic situation of the country is dire with liquidity of foreign exchange reserves below the critical level, and looming debt repayments.

She reiterates that academia must actively engage in igniting discussion in such times and this discussion is aimed towards fulfilling its role of giving inputs and suggestions to overcome this economic crisis.Meanwhile, the Managing Director SPDC Muhammad Asif Iqbal informed the audience that our country has a very limited option as almost all targets set for this year have been missed, and only a few of them were achieved. He mentioned that the main objective of the policies for federal budgets is the attainment of maximum economic growth, stabilization, and redistribution of government’s revenues which by large could not achieve, and the prediction of GDP growth for this year is less than one percent.

Another speaker, journalist Khurram Hussain was of the view that the high dependency on external borrowing has been proved as a major reason for the slowdown. At that time government was claiming that these loans will bring economic growth and this growth will help in the repayment of the foreign loans, but it couldn’t happen. “Policymakers are busy tackling the political situation, which is a conflict of political elites.”