Pessimism grows

The nation started the year 2022 under a euphoria of all good after moving out of the Covid pandemic largely unscathed, with the economy inching towards somewhat better amidst hopes that the inflation biting the common man may ease out with the political and economic stability of the country.

There was optimism all around for a better 2022 and the sentiments was bullish. In the backdrop, the insiders and state economic managers had fathomed that the nation is walking on a thin rope of all good euphoria and a slight shock could snap the rope and all will collapse like a house cards.

This ‘all good’ euphoria of people proved to be short-lived and fears of economic managers came true. A dramatic political and economic imbalance did occur and everything came crashing down. In a matter of just three months, people’s hope turned into hopelessness, optimism into pessimism with the bulls ceding ground to the bears.

People are at a loss to figure out what hit them, who hit them and why. The economic and political events moved so fast in tandem amidst multiple theories, talk shows and a social media onslaught — all shrouded in mystery and deception.

People, therefore, could not get honest answers to their questions. But what comes out a bit clearer is that it is self-inflicted and could have been avoided or worked out better in the best national and people’s interest.

What the nation witnessed in the last three months is catastrophic for the common man and a game of cards for the elite who have been entrusted with the destiny of the nation and its people.

Today, the nation under scorching hot weather is experiencing power load-shedding for hours, which has paralysed businesses and industry that provide the livelihood to the poor.

The increase in petrol prices with consequential increase in price of all basic commodities has created a situation in which inflation is spiraling out of control. Millions of people have fallen below the poverty line overnight.

Also, the electricity tariffs have been increased — severely denting the country’s already fragile industry. The situation is likely to lead to massive layoffs. People are losing hope and patience.

There is one word for all this. The nation is in a huge mess; in fact, a very huge economic and political mess. The most worrisome part is that the nation is not likely to get out of it anytime soon. The state economic managers too are lost and at times checkmated by events.

The federal energy minister, early this week, honestly said it all: “If the Prime Minister provides us funds to procure the fuel for the power plants, load-shedding would be over in 48 hours”. Sounds such a simple and apt answer to the peoples’ plight, but so difficult to accomplish as the government is short of funds to procure fuel to operate power plants shutdown on account of fuel shortage.

The Chairman of Oil Companies Advisory Council has revealed that the oil industry is under severe financial strains as international banks are not accepting letters of credit (LCs) opened by Pakistani banks and that this may lead to a breakdown in the country’s energy supply chain.

The chairman has stated: “Unfortunately, the country’s fuel supply is now also being severely threatened by the limited credit facilities, rising inflation and high interest rates and increasing USD-PKR parity.” The remedy to all this is quite complicated and not a quick fix.

Moody’s has downgraded Pakistan’s rating from stable to negative. This will make LC opening more difficult while global lending from various sources, including Pakistan’s friends, will become expensive and limited.

The above three developments are red flags, requiring the attention of our state economic managers.

Political uncertainty, too, has taken its toll. Stock markets are depressed, economic activities are down, transactions have shied down, new investment is nil and revenue growth is under threat. All eyes are on the International Monetary Fund (IMF) and consequently on some donor friendly countries to help salvage the situation.

The institution of judiciary has emerged out as the saviour in these hours of crisis. All other state institutions appear to have taken a back seat.

The institutions of executive and the legislatures have failed the nation and its people. Never before has the judiciary been placed in a situation when the treasury and opposition are both repeatedly knocking at their door for resolution of each and every conflict between the two.

People, too, now look to the judiciary for resolution of their civic and hardship issues. This state of affairs is not sustainable — neither politically nor economically. The relevance of the political institutions is being questioned. So what’s next?

Copyright Business Recorder, 2022