Perhaps it is the lack of other forms of entertainment, or perhaps extreme polarisation is the cause, but whatever the case may be, we as a nation are infatuated with non issues. Essentially, if it is only about the economy, which it is, it is utterly remarkable that despite a continuing decline our nation's economic fortune, the debate on media, drawing rooms and street corners is almost always focused on non-issues.
Irrespective of the assertions from both sides of the political divide, if the countries' debt and liabilities keep increasing, other than for capital investment, the economy is not moving in an upward trajectory. As of 30th September 2019, Pakistan's debt and liabilities stand at Rs 41,489 billion, including total external debt and liabilities of US$ 107 billion; for some technical reason the State Bank of Pakistan has not updated their website but 10 out of 10 the debt has increased.
It can be argued that focusing only on debt as an indicator of economic well being might be an accountant's view, but can it be denied that if you are unable to make both ends meet you are in deep shit? To repeat, debt is death; a slow painful death.
Perhaps the economy has already gone over the cliff and rather than deploying parachutes, we are discussing the scenery.
Perhaps the risk associated with hot money are overhyped and interest rates are kept high as a strategy for tackling inflation alone; and maybe hot money is good to get the lazy bankers out of the golf course. However, at the end of the day, it is decidedly Keynesian monetary and financial manipulation; monetary relating to value of the currency, financial relating to interest rates. Whether or not it is advisable to doublethink the market and mess with the currency and interest rates should be a debate for my friends who love the free market; for the better part, hot or cold, debt is debt and higher interest rates are undoubtedly keeping the rupee stable and impairing domestic capital investment. If the market was left on its own to decide the interest rates and currency value, all hell may let loose and we still may not have capital investment- which is the issue.
My advice to my friends who are infatuated by free markets is to at least be loyal to their views across the board rather than being selective, or go sulk in a corner; for my part the State has a role to play in the economy but the objective should be industrialisation alone; reviving the real economy is the issue.
Setting up multiple industrial zones is a start, but without a focus on which kind of industry and whether or not the ecosystem supports such industry, efforts to improve productivity and direct interventions to facilitate investments, the likelihood of all these SIZs succeeding is debatable - the how remains the issue.
The discussion over the trade deficit is all over the place. Yes genius, we know exports have to be increased, not only to control the trade deficit in the short-term but also to pay our external debts in the long-term. But how do you increase exports when you leave the gate wide open. Our domestic businesses can never compete with imports and the end result is that the lives of middle class and skilled workforce are devastated only so that the rich can buy cheaper consumer goods. Perhaps across the board tariff increases might tax domestic consumers and may also invite retaliation from our trading partners; however, conversely, decreasing tariffs further is definitely not the solution - unless you want to eliminate the leftover industrial units in the country. Globally, the vagaries of free trade are becoming evident and perhaps in the future WTO might even become a side mention in the world history; but as of today the alternative remains a mystery which is the issue.
Admittedly, the above discussions at least flirt with the real issues; 3-point drop in ranking does not even come close. It matters not what your ranking is in the Transparency International report, if you are ranked below 50 even, let alone below 100. It matters not whether the report is about perception or actual corruption; the latter is impossible to calculate and perceptions matter.
Making noise over whether rupee depreciation is good for projects with foreign currency components, how and who made money on flour and sugar pricing crisis and which flour is good for health, how to cook without tomatoes, whether the financial bosses had a tiff, who should be chief minister are all good for political point scoring and is perhaps good fun, but it does divert from the core economic issues - and unless the economy starts working, these debates will not matter.
Perhaps one strategy could be the Japan model, setting up of councils for each industry, if not for every problem statement, with experienced individuals-pay them and listen to them. I do not wish to elaborate on what free advice is worth!
The choice is ours - we can start debating issues and come to concrete solutions, or keep enjoying, admittedly amusing debates over non-issues!
(The writer is a chartered accountant based in Islamabad. Email: [email protected]. The views expressed in this article are personal. The views are not necessarily those of the newspaper)
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