Saturday May 25, 2024

Unity amidst crisis

Our economic woes are screaming truth partisan agendas only deepen pain

By Dr Farrukh Saleem
February 18, 2024
A woman checks the smell of rice at a market in Karachi. — AFP/File
A woman checks the smell of rice at a market in Karachi. — AFP/File

There’s an urgent need for a unified approach from across the political spectrum to address the current economic challenges. The economy is fervently calling upon the participation and collaboration of all political parties including PTI, PML-N and PPP to step forward in a joint endeavour. There’s an urgent need for a cohesive strategy that transcends political divides. There’s an urgent need to put aside political differences. There’s an urgent need to reconcile. There’s an urgent need to prioritize the common goal of economic revitalization.

Three pivotal issues demand immediate attention: (1) This year, the external financing requirement looms large at a staggering $25 billion; (2) Over the past year, the cost of essential commodities has skyrocketed, with natural gas prices soaring by 1,108 per cent, tomatoes by 90 per cent, wheat flour by 62 per cent, sugar by 55 per cent, and pulse mash by 37 per cent; and (3) The budget deficit has surged to an all-time high of Rs8.2 trillion.

To be certain, tackling these critical issues requires decisive action. To be sure, no single political party holds the silver bullet solution. Our economic woes are screaming the truth: partisan agendas only deepen the pain. The current crisis demands collective wisdom from diverse perspectives, expertise, and experiences across the political spectrum.

There is a bloodbath going on in our public-sector enterprises (PSEs). Our so-called PSEs take on additional debt of around Rs700 billion a year. The government doles out around Rs1,200 billion in so-called ‘grants’. The government hands out around Rs700 billion in so-called ‘subsidies’. That is an annual burden of nearly Rs2,500 billion. We must end this bloodbath because no one is willing to finance this bloodbath anymore. All political parties must recognize the gravity of the hemorrhaging – and must align their efforts and policies. Fast-track privatization is the only way out.

Furthermore, inefficiencies within the electricity and gas sectors have resulted in a daunting circular debt of Rs6 trillion, posing a serious threat to the stability of the economy. Urgent and comprehensive structural reforms are imperative to mitigate this risk and prevent further deterioration. Without unified efforts across the political spectrum, the challenges posed by the circular debt will persist as a formidable threat.

The economy is dependent on a significantly larger IMF package, which will only be secured with exceedingly stringent conditionalities. We are going to need at least a $6 billion package from the IMF and additional billions from multilateral and bilateral lenders. The IMF package will necessitate extremely tough choices. The PTI, PML-N and PPP must not remain prisoners of the past. They must bury the rivalries of the past. Cooperation must trump confrontation.

To be certain, no single party holds the solution alone. We must confront issues ranging from a staggering external financing requirement to the daunting circular debt in our energy sectors. It is time for the PTI, PML-N, PPP, and all political entities to rise above past grievances and work together in the best interest of Pakistan. They must join hands and write a new chapter in Pakistan’s rather checkered economic story. The time for unity is now.

The writer is a columnist based in Islamabad. He tweets/posts @saleemfarrukh and can be reached at: