The Pakistanis are battling an inflation rate of over 35 percent, a policy rate of 21 percent, depletion in value of their currency (PkR) by over 40 percent in the last 10 months, factory shutdowns to the extent of over 35 percent.
Unfortunately, however, our sterile government is busy in settling political scores. Nevertheless, except for certain TV talk shows, there is placid mass resentment against the precarious economic situation of the country.
Does this represent a positive resilience of our people against the mounting problems? Or, does it represent their helplessness or acceptance of the inevitable as there is no one to lead with a single agenda of economic reform? The opposition is concentrating on only a single-point agenda of holding of elections which they, based on surveys, believe would win by a landslide ushering in political stability, which is a sine qua non for tackling the economic crisis.
Another aspect, which is extremely perturbing the nation is that The Pakistanis have lost trust in the state and they are ready to face any odd that follows. This indicates that people have, by and large, already decided that the state has failed and all are trying to save themselves to the extent possible. Those who can convert their savings into dollars are doing so while talented youths are queuing up to emigrate as early as possible.
The happiest people in these circumstances would be those sitting in the ‘South Block’ (Secretariat Building) in New Delhi, who had been waiting for this day to come for the last seventy five years. In this author’s view, for an economically bankrupt country, nuclear power is a huge liability, so to speak.
In these circumstances, on account of our flawed policies, we are also fighting an internal security war in an economy that does not have adequate reserves for payment of its oil imports, etc., in the foreseeable future if others do not come forward to help us.
In his various articles carried by this newspaper since December 2021, this author has repeatedly stressed that in financial sense the country is no longer a ‘going concern’. Pakistan, even after an IMF (International Monetary Fund) programme arrangement, will not be able to balance its foreign currency requirements in the present state of affairs for the foreseeable time to come. If anybody has any doubt on that count they should see the projections by IMF for currency inflows and outflows from 2023 to 2028 available on the Fund’s website. There is a gap of over $ 75 billion that we can only ignore to our own peril.
On the fiscal side, even if we increase the tax revenues by 20% per annum, which is highly difficult on account of lesser imports, the present policy rate and the high level of government borrowings, the cost of debt servicing will consume the balance available with the Federal Government after distribution of share of revenue to the provinces. There is no space in the fiscal account.
On the energy side, with the circular debt, which is basically a circular subsidy of Rs 2 trillion, the situation is beyond repair in the present set of circumstances.
These three basic indicators are enough to demonstrate that the state is in serious trouble. However, there is no reaction from the people at large for the reasons identified in the earlier paragraphs. This is suicidal for any state because a society is like a human body.
What happens if the body or any part of it goes numb and becomes insensitive to the outside factors? The illness causes paralysis, breathing difficulties, and sometimes death. The Pakistani society is going through that phase.
There is no demise as yet; however, serious paralysis exists in state organs. The economic policy academics, media and the intelligentsia at large who, in the past had always vehemently supported status quo, have been exposed publicly for the reason that they were not telling the people the truth: this state is failing.
They were visionless, to say the least. They never made any constructive comparison with other countries and kept the people busy in trivial controversies. This state has virtually been totally spoiled in the past twenty years— from 2002 to 2023. This is a period when all the parties— the Establishment, PML-Q (Pakistan Muslim League-Quaid), PPP (Pakistan People’s Party), PML-N (Pakistan Muslim League-Nawaz) and PTI (Pakistan Tehreek-e-Insaf) have remained in power.
A comparative study with India on the economic indicators during that period was made by this author in of his earlier articles carried by this newspaper. Only one indicator is enough to tell the whole story. During this period, our population increased by 50 percent from 160 million, whereas India’s increased by 25 percent from 1100 million to 1400 million.
Our governments are afraid of theocracy as it does not favour population planning. If so then this country cannot run. The first corrective measure is to recognise that we are a woefully weak country insofar as our economy is concerned.
(To be continued tomorrow)
Copyright Business Recorder, 2023