Saturday September 23, 2023

Economic bomb

January 28, 2021

For the last two and a half years of the PTI government, Pakistan has witnessed unprecedented levels of poverty, food insecurity, economic uncertainty and chaos in all state institutions. Instead of empowering state organs, something PM Imran had vowed to do in his early days, he has weakened them to a whole new low.

We have seen no shortage of scandals – sugar, wheat, medicines, LNG and now the petrol crisis. These multi-billion-dollar crises reflect record-breaking incompetence, substandard decision-making and rampant looting.

Despite a historical dip in international oil prices, we are facing a massive oil crisis – of an unprecedented scale and nature. The petrol inquiry report, which was released in December 2020, estimated Rs250 billion worth of oil smuggling and numerous other controversial operations. On top of all this, the Senate’s Committee on Interior revealed that around 12 top oil importers were directly involved in creating an artificial crisis of petroleum products to mint money. This has caused losses worth billions to the national exchequer. Why is no investigation taking place?

When it comes to public debt, the current government has broken all previous records. Pakistan’s public debt is piling up at an alarming rate of Rs13.2 billion/day under this regime. Today, the public debt figure stands at around Rs35.8 trillion.

PM Imran has been critical of the previous government’s binge borrowing and pledged to bring the debt numbers down considerably. On the contrary, the PTI has performed worse than the last two governments, and has added Rs11.6 trillion in a span of 27 months.

When the PPP was in power, Pakistan’s public debt figure stood at around Rs15 trillion – way lower than what we have today. Despite a global financial crisis, skyrocketing fuel prices above $145, two massive floods across the country in 2010, the PPP government delivered growth in real income along with massive gains in the country.

It is important to point out how the government has failed to control food prices. Today, 6 out 10 Pakistanis are food insecure. Food inflation stands at around 20 percent, which is now the highest in the region. Instead of creating a constructive mechanism to control food prices, the government created a politically backed ‘Tiger Force’ to do the government’s job. Let’s not forget that Mussolini had created a similar force in fascist Italy to monitor food prices back in the days.

Our power sector is also facing a major crisis. Pakistan’s circular debt challenge is becoming more challenging by the day. Circular debt, currently standing at Rs2300 billion, is expected to swell up to Rs4000 billion by 2025. Federal Minister for Finance and Revenue affairs Hafeez Shaikh had claimed that “circular debt will be eliminated by Dec 2020”. Today, the statistics tell us a completely different story. The recent blackout which the whole country witnessed clearly indicates that the PTI government has threatened the very stability of the power sector. Instead of providing relief to the people in these tough conditions, the government decided to increase electricity tariff by Rs1.95 / unit this month.

While the power sector is in shambles, the LNG fiasco must also be highlighted. How can a government, responsible for energy and natural resources, forget to import LNG? No economist in the country can explain why this occurred. Why was the purchase of LNG not made in July when it was available at 5.7 percent? Instead, it was purchased in August, when the rate had sharply risen – making it much more expensive. This has resulted in losses of more than R 200 billion. The very same incompetence has led to severe wheat, sugar and oil shortages in the country. Again, the question arises here: why is no investigation taking place?

Sindh’s gas crisis is also exacerbating by the day. It is important to point out that Sindh is the largest contributor to nationwide gas production, producing 65-70 percent of it but is still facing major shortages. Article 158 of the constitution of Pakistan clearly states that “the province in which the well-head of natural gas is situated shall have precedence over other parts of Pakistan”.

Why is Sindh being deprived of its constitutional right? CM Sindh Murad Ali Shah has raised this issue on numerous occasions but the government has paid no heed. Due to this, our textile industry is now on the ventilator. Pakistan’s textile industry contributes 50-60 percent to the country’s export but has already lost its global textile share by 23 percent. This is shocking, considering we are the fifth largest cotton producer in the world. Is there any sector which is stable under this government?

Instead of attacking the opposition and blaming the previous governments, the PTI government must take responsibility and start doing its job. Debates should be taking place in parliament to tackle the economic crisis but the government has time and time again disrespected the parliamentary process. One of the reasons the Pakistan Democratic Movement (PDM) is protesting against this government’s system is because it has ruined the economic sector while the marginalized and poor bear the brunt. The economic crisis has turned into an economic bomb. Difficult times ahead for the country.

The writer is a member of the Sindh Assembly.