Underperforming economy

This refers to the news story, ‘Global entities recognizing Pak economic growth: Hafeez’ (Aug 13). The global institutions’ perception is from a different angle while the fact is that the economy is in great distress. Though agriculture is the backbone of our economy, Pakistan has become a food importing country. It is also deficient in cotton with a drastic fall in output over the last few years. Cotton was a lucrative cash crop at one time, meeting not only the needs of the local textile industry but a valuable foreign exchange earner from exports as well. The manufacturing sector, a major employment contributor, is also reeling from crisis as large scale manufacturing (LSM) contracted 10.2 percent during 2019-20. The decline in international oil prices has come to the aid of the nation and has mitigated some of the pain in the short run. Exports remain disappointing as the country has failed to take advantage of the new FTA signed with China under which hundreds of items were allowed duty free access to its market.

The bottom line is that growth has turned negative, joblessness has massively increased and millions of people have fallen below the poverty line. Prices of essential commodities have shown a steep upward trend while energy costs have also gone up. The energy sector has become unmanageable with mounting circular debt which the government is unable to address. Most of the state owned entities (SOEs) continue financial hemorrhaging as the government has failed to restructure them. The PSM remains closed without any decision on its fate, Pakistan Railways is on the verge of collapse with frequent mishaps taking place while PIA has technically collapsed with the ban of flights by European agencies owing to safety concerns. The oversized government structure remains unaddressed as the report of Advisor to the PM on Institutional Reforms & Austerity Dr Ishrat Husain for a lean and thin government has not been implemented. Ex president Musharraf implemented an officially announced NRO on corruption to protect his seat which he subsequently regretted. The PTI has similarly though silently compromised on corruption, with the accountability process stalled, as part of the political arrangement. When political sensibilities take precedence over economic challenges, all-round under-performance is inevitable.

Arif Majeed

Karachi