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Wednesday September 28, 2022

Battling hard times?

July 13, 2022

A widely visible sense of deprivation across Pakistan in the run-up to Sunday’s ‘Eidul Azha’ was palpable with frequent reports of fast mounting inflation eating into the budgets of ordinary consumers. The mood across the country underlined a telling point: tight budgets chipping away at what was once affordable and taken for granted. In brief, the battle to confront the increasingly hard times for Pakistan’s population of 220 million has never been equally challenging.

The trend is hardly unexpected. Just ahead of the Eid holidays, the State Bank of Pakistan on Thursday raised its interest rate to 15 per cent – more than double from just ten months ago. And with inflation easily outpacing the prevailing interest rate, the central bank will remain under pressure to raise the rate further in the not-too-distant future. The net result will inevitably slow down an already under performing economy and make it harder for policy makers to oversee the creation of large numbers of new jobs.

As Pakistan struggles to revive payments under a stalled $6 billion loan programme, the population at large is clearly feeling the pinch. Irrespective of Pakistan’s rulers predicting the worst to be over in the not-too-distant future, the writing on the wall suggests the contrary. With global oil prices reversing just very modestly, the era of painful adjustment for energy importing countries like Pakistan promises to remain in place for now. Besides, there’s no assurance in sight of the so-called ‘super commodity cycle’ driven by galloping commodity prices about to reverse significantly any time soon. As demand for energy grows in the coming months in preparation for the winter, it is almost impossible to predict future trends surrounding oil prices.

The combined effect of global trends alongside Pakistan’s own financial turmoil appears to fuel a powerful outcome: the country’s continued reliance on the IMF for the near-to-medium term, possibly lasting for the next few years. For Pakistan’s already stressed population, tightening belts under the IMF’s watch might well remain the norm for the foreseeable future, especially as the jury is still out on the fate of recently announced measures to raise tax collections significantly.

The net result of this all-around bleak scenario has left Pakistan’s ruling class with few options to reduce the growing stress on the country’s broad mainstream, without potentially overseeing a collapse of the IMF loan programme. Though the size of the IMF’s loan is indeed modest, it provides Pakistan with the necessary cushion to turn to other lenders for eventually meeting an annually recurring balance of payments deficit.

In this tough environment, battling hard times with few precedents in Pakistan’s history requires imagination and courage, notably driven by a two-pronged approach to break fresh ground. On the one hand, a popular outcry has grown in the past few years focused on escalating food prices outside the reach of many across the country. Even areas once considered prosperous for producing agricultural commodities are struggling today in the face of sharply rising costs of producing different eatables. Meanwhile, essential support services, notably research and extension services to support farmers, remain largely dysfunctional. The net result of this failure to give a timely impetus to the agriculture sector is widely seen across Pakistan’s large and small cities alongside its villages. Despite being endowed with some of the most ideal conditions to support its crop output, Pakistan’s performance in this area has only slipped with the passage of time.

On the other hand, Pakistan’s ruling structure must oversee a national campaign to revive and expand the work of the non-profit sector, commonly known as non-government organizations or NGOs. For the past decade, successive governments have tightened curbs around the community of NGOs in the hope of making them more accountable especially in disclosing their donations from overseas sources. But this exercise has had a deeply detrimental effect on the work of the non-profit community across Pakistan, forcing many to partially or fully halt their work.

As Pakistan struggles to meet the fallout from its IMF-led belt tightening, it is important to mobilize all possible resources to fill the gap. At a time when countries including Pakistan remain under the global spotlight on matters related to money laundering, it is essential that the country’s non-profit community is facilitated to meet global standards while serving the needs of Pakistan’s impoverished population. This is especially crucial as international development assistance from the developed world is showing signs of being scaled down while donor countries reconcile with their own economic challenges. But turning the tap off either fully or partially is just not the answer to suspicions surrounding activities of nonprofits, especially in the midst of increasingly challenging times.

The battle to secure Pakistan may be hard, but its still worth fighting to turn around the fate of a country that offers both opportunities and challenges.

The writer is an Islamabad-based journalist who writes on political and economic affairs. He can be reached at: farhanbokhari@gmail.com

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