KARACHI: Chairman of National Business Group Pakistan, President Pakistan Businessmen and Intellectuals Forum Mian Zahid Hussain has said a solution to the current serious economic crisis is possible but no one wants to resolve it.
The lack of focus and unity among the important stakeholders also hinders the resolution of the deepening crisis, he said. Mian Zahid Hussain said that everyone is worried about the crisis and knows the solution but no one is ready to take needed steps due to their political cost.
He said that now friendly countries are also giving loans on strict terms as most of the rulers have given priority to personal and political interests over the national interests. Instead of expanding the economy, they have always tried to boost their vote bank with damaging policies and this trend is still going on.
He noted that even the most important economic decisions are made on political grounds and the business community is ridiculed in the name of consultation. Such irresponsible policies leading to the loss of resources cannot last long because our economy is now dying, he warned.
Mian Zahid Hussain said that Pakistan is not the first country to be bankrupted by elite extravagance, bad decisions and poor governance. Even the most glorious empires in the past have perished by spending more than their income.
The most important reason for the subcontinent’s slavery was spending more than income. Pakistan is currently at risk of a trade deficit of $45 billion, with a current account deficit of $12 to 15 billion after potential remittances of $32 to 33 billion. He said that Pakistan will have to retire old debts of $12 billion this year which will be a problem.
He noted that the reasons for exports of only $30 billion as compared to imports of $75 billion include increased business cost, FBR attitude, inconsistency in policies, poor governance, difficulties in starting a new business and shortage of gas. At present Pakistan has become a net importer of food items and last year we had to import cotton after the failure of local crop.
The losses of the power sector have reached six to seven hundred billion rupees, the circular debt of electricity has reached two and a half trillion rupees, the revolving debt of the gas sector has reached seven hundred billion rupees but instead of reforms, a destructive policy of tariff hike is being adopted.
The incompetence of officials in the import of LNG caused the loss of hundreds of billions of rupees but no one was asked to clarify his position, he said, adding that four billion dollars are wasted annually to keep state-owned corporations artificially alive.
Various institutions make purchases of up to $60 billion annually with an estimated leakage of $15 billion, which if reduced will help the country get rid of dependence on foreign loans.
Once the standard of living of Pakistanis was a dream for Indians, but now India has left us far behind, he said. India’s population is about five times larger than ours but its economy is about ten times larger than Pakistan’s. Pakistan has to bear the brunt of IMF loans every second or third year while India has not needed IMF support for the last 30 years.
Not in the very distant past, we used to ridicule our brethren by calling them “Bhoka Bengali” but now their GDP is $324 billion while our GDP is about $263 billion. Now we are taking loans from China at 3% interest. When China refuses, expensive loans are taken from Saudi Arabia at 4% interest and 3.8% interest will also be paid on getting oil on deferred payments. Preparations are also being made to take expensive loans from the UAE but some people continue to claim ‘tremendous economic growth’, he said.
He asked why inflation is 18%, unemployment is 5% and poverty is 39% and a new record of borrowing is being set if the economy is growing as claimed by the rulers.
Government should reduce lavish spending, promote agriculture, control corruption, make it easier to do business, maintain consistency in policies and make the FBR business-friendly, only then employment, production, exports and revenue will increase and we will not be humiliated by any country or institution and the burden of taxes on the poor could be reduced, he advised.
Copyright Business Recorder, 2021
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