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Sunday November 27, 2022

Economic suicide

July 31, 2022

Suicide is “death caused by injuring oneself with the intent to die”. Pakistan’s politics is killing Pakistan’s economy. As per the World Bank report tilted ‘Pakistan@100: Shaping the Future’, “Pakistan can become a $2 trillion dollar economy….when Pakistan is 100 years old”. The report adds that a “$2 trillion economy means an upper middle-income country where per capita income will be $5,702….”

According to another World Bank report titled ‘Pakistan Development Update’, “Given Pakistan’s observable characteristics in terms of economic size, level of development, remoteness, and factor endowments, it is estimated that Pakistan’s potential annual exports are at $88.1 billion….” Pakistan’s politics hasn't let our exports go over $32 billion.

According to the US Energy Information Administration (EIA), a principal agency of the US Federal Statistical System, “Pakistan may have over 9 billion barrels of petroleum oil…” The EIA further claims that “Pakistan holds sizable shale gas reserves of 105 trillion cubic feet (Tcf).” At our current rate of consumption, it will take us 50 years to finish our reserves. Alas, Pakistan’s politics is keeping Pakistan far far away from Pakistan’s full potential.

Lo and behold, Pakistan’s solar power potential stands at '2.9 millionMW' – we are currently producing 530MW. Pakistan’s wind power potential has been estimated at 346,000MW; we are currently producing 1,248MW.

Now potential versus reality. The current economic trajectory is towards economic suicide. The rupee is down by more than 30 per cent in the past 100 days. Pakistan’s oil companies are finding it extremely difficult to buy dollars in the interbank market in order to buy oil. Auto assemblers are shutting down. Some five dozen drugs – including lifesaving drugs – are now in short supply. Cement sales are down 54 per cent.

Yes, the current economic trajectory is towards economic suicide. The trillion dollar question is: who will undertake course correction? The executive is fighting political fires day in, day out. Parliament is dysfunctional. There’s infighting with the judiciary. And the army is ‘neutral’. That sounds like the making of a perfect storm – a ‘particularly violent storm arising from a rare combination of adverse factors’. A perfect storm almost always has disastrous consequences.

We are now trapped in a vicious cycle. We are an import-dependent country. We have been running trade deficits for the past several decades. We have borrowed $135 billion. Now the rupee is crashing. There will be more inflation. There’s social unrest. In Sri Lanka’s case, social unrest converted into violent protests-followed by troop deployment.

We have the potential – all we need is to correct our course. But who will undertake Pakistan’s course correction? Parliament? Cabinet? Judiciary? Neutrals? We must bring in politics of ‘national interest’. We need watertight economic stabilizers. We need a permanent ‘Economic Emergency Council’. Look at Italy: 69 governments since 1945 but the economic policy remains more or less on course. Economics must take over politics – or we are fast moving towards an economic suicide.

The writer is a columnist based in Islamabad. He tweets @saleemfarrukh and can be reached at: farrukh15@hotmail.com

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