Daily Times

Needless to emphasize that Pakistan at the moment is meandering through an unprecedented economic crisis which is the cumulative effect of the inability of the successive regimes to effect structural changes conducive to macro-economic transformation, a greater focus on micro-economic achievements through excessive short-term borrowing that triggered snow-balling increase in current account deficit leading to excessive pressure on foreign exchange reserves.

As the economy failed to generate surpluses, the reckless borrowing mounted unbearable pressure on the current account due to the enhanced cost of debt servicing and repatriation of profits. Resultantly, since independence, barring a few years, Pakistan has never been able to present a surplus budget. All economic variables and indicators have remained stressed.

Economic development is not dependent only on the traditional four factors of production. For the combination of them to succeed and produce promising results, the country needs continued political stability. Unfortunately, in addition to purely economic mismanagement and unimaginative economic policies pursued by successive regimes, political instability has also immensely contributed to the economic meltdown, which is now really hurting. On top of that, the impact of the global economic situation and the devastation perpetrated by floods due to climate change are also putting tremendous pressure on our economy.

Economic development is not dependent only on the traditional four factors of production. For the combination of them to succeed and produce promising results, the country needs continued political stability.

It is regrettable to note that not realizing the gravity of the situation, PTI is hell-bent on fomenting political instability and taking advantage of the situation to achieve its narrow political agenda. It seems oblivious to the fact that its actions are inimical to the interests of the country. It has been persistently advocating the rhetoric for immediate elections as the only solution to the current crisis and trying to make the people believe that as a result of the policies pursued by the PDM government, the country would soon default on its loan commitments and face a situation like Sri Lanka. It could only be the wish of the party and not a factual assessment of the ground realities. This wish conforms to a proverb which says “If wishes were horses, Beggars would ride”

The narrative of default being rubbed in by PTI is surely a political gimmick designed to malign and discredit the PDM government and orchestrate a syndrome of fear among the masses. The reality is that the government, instead of refusing to pay its debts, has already arranged a one billion dollar maturity amount along with interest in regards to the third Pakistan Sukuk, which matured on December 5. The next obligation in this regard would be a 10-year $ 1 billion international bond due to be paid in April 2024.

The fact that Pakistan has been able to secure pledges of over $10 billion from the multilateral and bilateral donors at the International Conference in Geneva, co-hosted by Pakistan and the UN, is also likely to mitigate the economic challenge. Talks with IMF in Geneva have also ended on a positive note. According to reports, Saudi Arabia has decided to increase its foreign exchange deposits from $ 3 billion to $ 5 billion, as well as increase its investments in Pakistan to $ 10 billion. No wonder then that Bloomberg, a reputed international rating agency has ruled out the possibility of Pakistan ever defaulting on its loan commitments. It can be safely inferred from the foregoing developments that the rumours about default by Pakistan are ill-founded.

The irony is that the PTI is itself responsible for precipitating the current economic crisis. During its three and a half years in power, the national debt increased from Rs 30, 000 billion to Rs 60,000 billion; the circular debt increased from Rs 1100 billion in 2018 to Rs 2.5 trillion; the circular debt in the gas sector increased from Rs 350 billion in 2018 to Rs 1.4 trillion in April 2022; the PSO circular debt increased from Rs 200 billion in 2018 to Rs 650 billion; and the trade deficit increased from $ 37.3 billion in 2018 to $ 45 billion.

The situation demands immediate course correction and setting directions that facilitate macroeconomic structural changes. There seems no way out of the permeating economic quagmire except this strategy.

While it may not be possible to ward off the debilitating influence of global economic nosedive and hydra-headed inflation, something substantial can surely be done on the domestic front to ease the situation. First and foremost, all political leaders and parties must be persuaded to begin a dialogue to devise strategies for resolving contentious political issues and implementing systemic changes that will ensure the country’s long-term political stability.

In regards to the economic health of the country, it is also an inescapable obligation to devise a national economic agenda enjoying the consensus of all the stakeholders, which must be followed by any party winning the franchise of the people to run the affairs of the state. It should be made a constitutional obligation. Perhaps it would be a good idea to invite economists of international repute to interact with politicians to firm up economic priorities and the adoption of the national economic agenda. The sooner it is done the better. It is time to abandon false egos and give preference to national interests. However, given the atmosphere of enmity between PDM parties and PTI, which seems irreconcilable, perhaps the establishment, instead of its traditional interventionist role, may facilitate and nuance the process of dialogue between them.

Meanwhile, strict austerity measures coupled with substantial cuts in non-development expenditures have to be effected to ease the situation to some extent. The beginning can be made by reducing the size of the cabinet and making it obligatory for the ministers and bureaucrats to travel in economy class while going on official business. There is also a need to control borders with Iran and Afghanistan to check the smuggling of food items and flight of dollars from the country, banning the import of luxury items immediately. The rate of the dollar against the rupee also needs to be contained by devising a proper system to regulate the exchange companies dealing in selling and buying the dollar and other currencies.

For mitigating the woes of the public and sparing energy for industries which are vital for the development of the country, the government should encourage citizens to install solar panels for their domestic needs where ever possible. The banks may be asked to finance those undertakings on easy terms. Even the big industrial concerns may be instructed to generate their electricity.

The writer is a former diplomat and freelance columnist.