LAHORE: The public, rulers, and policymakers are confused about how to handle the economic chaos. The public wants immediate relief, and rulers would love to oblige, but policymakers want to move cautiously.
Economically, the situation has not improved much in the last two months. Resource crunch is still ballooning. The state has doled out subsidies beyond its capacity.
Resources were created by moving funds from other departments and development projects. The danger of immediate default has been avoided, but we are still moving in the red zone. We are waiting for the approval of the International Monetary Fund (IMF) package.
The only silver lining is that crude oil rates have started receding in the past two weeks. Decline in crude oil rates has just started, and there is talk of decreasing the petroleum rates. We must be realistic. Pakistan agreed with the IMF to increase petroleum levy at a rate of Rs5 per month.
Had the prices remained static, there would be a regular increase of Rs5 per litre in petrol prices.
With the prices going down that increase would be absorbed in the savings made from lower crude oil rates. The government might lower the prices on July 15 after adjusting Rs5 per litre.
This decline has come at an opportune time for the government as by-elections are scheduled two days later on July 17.
The economic managers would advise against reducing petrol prices. But rulers would build a case that they pass on the decline in prices to the consumers. Crude oil rates recovered in early trading by 0.5 percent so we must remain cautious about adjusting oil prices.
There are many decisions that the government was forced to take in view of the power crisis like closing the markets by 9pm. It will take a while till this crisis is resolved.
But even if the power supplies improved, the government must maintain current timings.
This not only saves power but also reduces petrol consumption as most families visit markets for fun sake and window-shopping, wasting a lot of gasoline in the process.
As the situation on prices improves, the state should start slowly withdrawing the subsidies. We must not make our poor parasites on national resources.
As the Chinese say, instead of giving the poor a fish, provide him with a net to catch the fish for others as well.
Resources must be spent on creating jobs for the youth. Resources should also be allocated for quality skill imparting institutes. Manufacturing investment would accelerate if people with required skills are available in the market.
There must not be any relaxation on the ban on import of luxury goods. Our economy cannot bear the burden of huge foreign exchange that luxury items consume.
We must impose a permanent ban till the time our trade balance improves. There should not be any relaxations in this regard.
Currently, we post a huge current account deficit even after consuming the entire $30 billion remittances that our workers send from abroad.
Sectors that can create jobs are the apparel sector in manufacturing and construction sector in services. The sunrise sectors are IT in services and pharmaceuticals in manufacturing. Planners should facilitate these sectors on priority.