Friday August 19, 2022

Crisis upon crisis

July 26, 2021

The state of the economy of any country is determined through its Gross Domestic Product (GDP). Ever since the PTI government has come into power Pakistan’s economy has been on a constant downward trajectory, even before the Covid-19 crisis hit and slowed down the global economic wheel.

At the very same time, all key macroeconomic sectors face a new low, with serial mismanagement and dubious statistics becoming the norm in today’s economic climate. While countless dubious statistics have been presented in the budget documents, the reality is appalling. In all this, the federal government’s self-complacency will lead to its downfall

The most imperative question is how the federal government projected an economic growth of 4 percent, contrary to World Bank and IMF projections (1.5 percent & 2 percent respectively) for the next fiscal year. Economists, in Pakistan and abroad, kept scratching their heads to make any sense of it. It was very clear that the government wanted to present dubious figures and statistics to further mislead the people of Pakistan.

When it comes to public debt, the current government once again broke all previous records. Public debt has soared by more than 55 percent since 2018. Currently standing at Rs44 trillion, it is now equivalent to 93 percent of Pakistan’s total GDP. To add more fuel to fire, the federal government has now taken a massive loan worth $800 million to finance the soaring budget deficit. This is the very same government which claimed it would not borrow to run the economy.

A government naturally receives appreciation when it successfully manages to bring the inflation rate down. However, in Pakistan the inflation rate has been on the upward trajectory since this government took office. Food inflation, which affects the marginalized the most, soared to an alarming 14 percent in the urban and rural areas. The federal government’s plan to tackle inflation through the politicised Tiger Force, endorsement of cartels and mafias to set food prices, has created a massive inflation bomb inside the country.

Pakistan’s agriculture sector has also been put on the ventilator. But again, in the Pakistan Economic Survey, the federal government conveniently presented dubious statistics. If the agriculture sector grew by 2.7 percent then why is the PTI government importing key commodities such as wheat, cotton and sugar for an agrarian economy today? Cotton and wheat production have dropped by a massive 34 percent and 10 percent respectively in the previous fiscal year. On the contrary, Pakistan was made wheat-secure by the PPP government in 2013.

Due to rising imports and lower exports, Pakistan trade deficit has soared by 30 percent to almost $33 billion now. Why was the federal government misleading the people of Pakistan by showing a current account surplus all fiscal year when the country’s trade deficit has once again broken all previous records?

One reason why the trade deficit is exacerbating at an alarming rate is due to heavy imports which include sugar, wheat and even oil. All of this is happening in a country known to have an agrarian economy. Pakistan’s economy has been gripped by back-to-back scams – be it sugar, wheat, oil or even LNG. Serial mismanagement, corruption and sheer incompetence has led to losses worth billions to the national exchequer while little is being done to expose the real culprits.

What’s really confusing is why the federal government thought it could portray the budget as “people friendly”. Soon after presenting the budget documents inside parliament, the federal government immediately hiked electricity and oil prices, which will directly worsen the inflation rate inside the country.

This year, despite a dip in international oil prices, the government hiked local oil prices more than five times. Instead of providing relief in times of inflation and unemployment, the federal government wants to add a burden to the billions of people of Pakistan through indirect taxes and tariffs. Once again, the poor and the vulnerable will be affected the most.

In any parliamentary system, the federal government aims for consensus-building on issues of national security. As of now, Pakistan’s biggest internal security challenge is the looming water crisis. Instead of utilizing the Council of Common Interests (CCI) – a forum where all provinces sit on the same table with the PM to discuss issues such as water security – the federal government has cut water supplies to smaller provinces. Even in the budget documents, a comprehensive plan to tackle our water woes was missing.

Economic crises always create political crises. Pakistan’s economic health must be restored immediately. Without parliamentary supervision and consultation with all stakeholders, the federal government simply cannot steer the economic wheel out of the multiple crises it faces today. A national consensus is the urgent need of the hour.

The writer is a member of the Sindh Assembly.