Capital suggestion: Alarm bells

Current account deficit: our current account deficit surged by a whopping 48 percent to an unmanageable $9 billion in the first seven months of the current fiscal year. The SBP’s foreign exchange reserves are down to $12.7 billion in spite of the multi-billion dollar loans that the SBP has taken over the past year. Red alert: the SBP has reserves that would cover around two month’s worth of imports.

In February 2017, the SBP had imposed restriction of mandatory 100 percent cash margin on the import of 404 items. In October 2017, the FBR slapped a regulatory duty on 731 import items (including diapers, shampoo, tomato paste, chocolates, dairy items, dog food and vehicles). Red alert: the current account deficit still surged.

Budget deficit: the Ministry of Finance has completely failed to ensure even a semblance of fiscal discipline. The National Assembly had approved a budget deficit of 4.1 percent of the GDP or Rs1.480 trillion. The current trend suggests a budgetary deficit of over six percent or Rs2.2 trillion.

Power sector: in 2013, the power sector’s line losses stood at Rs120 billion. Red alert: the power sector’s line losses have since surged to Rs360 billion. In July 2013, the PML-N government paid Rs480 billion worth of outstanding circular debts. Lo and behold, the circular debt has once again surged to Rs520 billion.

Let’s not forget that on top of the Rs520 billion the government has parked an additional Rs450 billion in a shell company that the government calls Power Holding Company (Pvt) Limited. Lo and behold, Power Holding Company (Pvt) Limited has no money to pay even the interest due on what the government has parked in it. As a result, Power Holding Company (Pvt) Limited has started to borrow even more money just to be able to pay interest on what the government has parked in it. Red alert: the power sector’s accumulated losses stand at a colossal Rs970 billion (and these losses are kept hidden under the mattress).

In another shocking development, Pakistan State Oil’s receivables have surged to Rs334 billion. Lo and behold, Sui Northern Gas Pipelines has defaulted on Rs15.9 billion. Lo and behold, PIA has defaulted on Rs26 billion.

We are a twin-deficit economy. Lo and behold, the historically high current deficit and the multi-trillion rupee budget deficit have indebted each and every Pakistani family to the tune of Rs1 million. He that dies pays all debts – William Shakespeare

The writer is a columnist based in Islamabad.

Email: farrukh15@hotmail.com Twitter: @saleemfarrukh