Beggars can’t be choosers

LAHORE: Pakistan is the most vulnerable economic country in the region that is dependent for support on various power blocs, each of which does not see eye to eye with the other.

If we look at India, it is also seeking support of all economic and power blocs, but it is not as vulnerable if it loses the support of one. The first reason is that it is economically more developed. The other reason is that India has made those blocs dependent on Indian economy.

The United States and Europe are highly dependent on the software industry of India. Its low cost generic drugs help the developed countries manage their public financed health bill. It has better trade relations with all its neighbours, including Bangladesh, Sri Lanka, Afghanistan, Iran, and Myanmar.

Its trade with China crosses over $80 billion. When tensions between the two countries disrupted trade, it impacted China more as its exports to India amounted to over $60 billion, while Indian exports were only $20 billion.

In the Middle East that was once considered the stronghold of Pakistan, Indians have virtually displaced Pakistanis in most of the countries.

Saudi Arabia and United Arab Emirates have many times more investment in India than Pakistan. Indian exports to the Gulf region are also growing very fast while ours are stagnant.

Iran withstood the sanctions from the west admirably well. Its trade relations with India are many times stronger than its relation with Pakistan.

China and India in fact defied the sanctions to continue buying crude oil from Iran, but despite being so close Pakistan dare not openly trade with Iran because we feared economic squeeze from the US and annoyance from Gulf States.

Pakistan is in such a precarious situation that it cannot afford to defy any of its financers.

We have seen in Saudi Arabia’s case that our soft threat on taking Kashmir issue outside the Organization of Islamic Countries was not taken kindly by the Kingdom.

We were asked to return $1 billion of Saudi Arabia’s loan immediately. The deferred oil payment facility has also not been renewed.

What worries the country’s economic managers is that the UAE might also follow suit. We are obliged to use the services of our army chief for fire-fighting.

We reached this stage because of our own inefficiencies. Every economic expert says that Pakistan’s tax potential is double the current tax revenue collection.

Even Imran Khan promised that the tax revenues would be doubled in the second year of PTI government to Rs8,000 billion. The ground reality is that we were hardly able to collect tax revenues that the beleaguered PML-N collected in its last year.

Pakistan’s tax potential is much beyond Rs8,000 billion. We posted a fiscal deficit of over Rs3.3 trillion last fiscal that is equivalent to 8.1 percent of our GDP.

Had the revenues been doubled as promised by the PTI chief at the time of assuming power, we would have ended up last fiscal with a surplus of Rs700 billion.

There would have been no need for domestic or foreign loans. The rupee would have remained stable if there was no need to consume foreign loans for domestic consumption.

Had the government stopped the Rs1,500 billion bleeding from public sector companies, our budget deficit would have almost halved. Unfortunately, the losses of public sector enterprises have increased instead of declining during the past two years.

This is a recipe for disaster and not growth. Government’s woes were compounded by the decline in manufacturing and agricultural productivity.

When a new government assumes power it takes the businessmen into confidence. It ensures that the confidence of businessmen is not hurt.

It does not go on a witch hunt on false assumptions based on political affiliations. Businesses have apprehensions whenever a new government comes into power.

They have to be comforted and assured that fair trade practices would continue.

They are assured that any change in sector-wise trade policy would be done with their consultation.

They have to be assured that whatever commitments the government makes would be fully honoured.

This government acted the opposite and failed to honour its commitments.

It has been in power for two years, but the long-term trade policy has not been announced. The textile sector is still waiting for policy to plan investment and exports.