Envy thy neighbour’s economy!

LAHORE: Saudi Arabia has deposited $3 billion with our central bank that could be withdrawn on 72 hours’ notice; around $1 billion reserves would deplete by the time the International Monetary Fund Board (IMF) meets and approves a $1 billion tranche by mid-January.

The rupee would go up for a while before resuming its downward path unless we reduce our import bill. This $3 billion from Saudi Arabia have no similitude to $3 billion the same country gave to Pakistan as grant in 2013. It was before that grant was received that the then finance minister had warned the textile tycoons at a function that rupee would bounce back with a bang. He knew that $3 billion was all ours and we do not have to pay back.

The rupee appreciated with a bang soon after that and paved the way for its long-time stability. Those holding dollars suffered great losses.

The current head of finance in the government repeated the same warning to businesses though he knew the deposits would come with humiliating conditions and must be returned in one year. The rupee would appreciate slightly because of this deposit as well but it would not last long. The reserves would continue to deplete and keep pressure on our currency.

Certain recent events in Pakistan would also have adverse impact on the economy. We have strayed too long and seem to have lost our way. A Bangladeshi advertisement on their coming Golden Jubilee of Independence gives a glimpse of the deterioration we went through in the last few decades. Bangladesh was a basket case when it got independence from Pakistan. It was among the poorest countries of the world even in the 1990s almost 20 years after its independence. They marched ahead from then onward. In 1990 their per capita income was less than half that of Pakistan.

Today it is $2,064, almost all of which is their own money. Our reserves might reach $19 billion today after Saudi injection but most of it is borrowed money.

The foreign reserves of Bangladesh stand at $42 billion, double than Pakistan’s per capita income of $1,130. In the same way it is constantly growing above 5 percent for the last 15 years. Our average growth is pathetically low.

The progress in Bangladesh has come on the strength of consistent policies, strong institutions and extreme austerity practised by their ruling elite (whoever ruled them). Pakistan’s leading businessman Mian Mansha once told this scribe that his family had large businesses in East Pakistan (Now Bangladesh) and his family had terms with Sheikh Mujeeb Ur Rehman family. He said he visited Bangladesh on the invitation of Bangladeshi Prime Minister Sheikh Hasina Wajid (daughter of Sheikh Mujeeb).

He said when he entered the office of the Bangladeshi prime minister there was a lone bulb lighting the whole corridor leading to the PM office. He said Hasina was sitting on a simple desk.

This scenario is in sharp contrast to the pomp and show we see at the office of our Prime Minister but also that of federal ministers. Mansha said Hasina wondered as to why successive governments in Pakistan changed the policies of their predecessors. She pointed out irrespective of the party in power the economic policies of the Bangladeshi government remain unchanged.

The importance the Bangladeshi government gives to the businesses can be judged by the fact the office of the head of their private sector textile body is in the PM house to ensure regular consultation with the chief executive of the country. These measures have translated the poorest economy into a vibrant one.

All human development indicators have moved up sharply in Bangladesh. The school enrollment is near 100 percent, while the infant mortality rate is one-fourth of that of Pakistan.

Their population growth rate is less than 1 percent, while ours is over 2 percent. Their literacy rate is higher than ours. The average age in Bangladesh is 72 years compared to ours 67 years. Fifty years ago we were a vibrant economy and now a poor one. Bangladesh eradicated poverty very quickly to the surprise of the entire world. We have added poverty to the dismay of our well-wishers.

Bouncing back is difficult but not impossible. We should study the success stories of our three neighbours and follow all the good practices that contributed to their success. At the same time, we will have to stop repeating the past mistakes that landed us in trouble.