The economy under imminent stress and strains: causes and remedial measures

In the aftermath of General Elections 2018, the newly-elected government came into power in September 2018. The post-election era unveiled innumerable crises, which are being looked upon as the direct effects of flawed policies of previous two regimes. The major challenge being faced by Pakistan is an economic crisis. Ever since independence, Pakistan has ironically been dependent upon exotic loans from different quarters including the International Monetary Fundforrunning its economy. The load of such loans had never been so enormous up to 2002 as it is these days. In the last one decade, the volume of loans from IMF seems to have blown out of proportion as to jeopardize economic stability of the country. Ours is a country of 220 million people but with a colossal amount of foreign debt. If the entire loan, as it is, is divided by its total population, every individual is under a huge burden of One Hundred and Thirty Five Thousand Rupees.

The political thinkers and economists stress upon overall audit of all borrowings and spendings thereof to learn where such huge moneys had gone. A fleeting glance at this sorry state of affairs leads one to no other conclusion but one and that is that the spendings from such borrowings appear to be unaccounted for in material respects.

The causes for such economic crises, inter alia, come under four major categories: Economic, Political and Administrative including allied, ancillary and incidental reasons.

Economic misadventures are: firstly, too much non-developmental charges, i.e. , purchase of expensive vehicles for political elite and top slots of bureaucracy, unnecessary decoration of offices of federal and provincial cabinets and bureaucrats and daily entertainment expenses thereof, non-beneficial foreign tours of ministers and bureaucrats, unwanted huge expenditures on protocols, etc; secondly, huge bulk of imports of unnecessary items like cosmetics, cigarettes, vegetables and fruits etc; thirdly, excessive decline in exports, that is to say, imports being much more than exports and the bill of payments being more than the receipts; fourthly, utter failure of Federal Board of Revenue in relation to tax collection etc; fifthly, failure of State Bank on financial discipline and reforms, etc; and sixthly, inaction of Securities Exchange Commission of Pakistan in relation to its obligations under the Constitution and law of the land.

The causes for such economic crises, inter alia, come under four major categories: economic, political and administrative including allied, ancillary and incidental reasons

Political causes are: i) revenue-generating organisations like Pakistan International Airlines, Pakistan Telecommunication Company Limited, Post Office of Pakistan, Pakistan Steels Mills and Pakistan Railways are on the verge of collapse owing to various reasons, such as inefficiency, induction of incapable people at the top positions, politicisation of organisational set ups, non-accountability of high-ups etc; ii) politicised bureaucracy and police at federal and provincial levels and main reasons for such decay are political interference in police and bureaucracy, posting of senior officers on the dictation of politicians to serve their vested interests etc; iii) need for a vibrant National Education Policy from pre-nursery up to doctorate level; iv) lack of National Health Policy for all including middle class and poverty stricken people; v) no National Water Policy for conservation, and management of water for domestic, consumptive and non-consumptive uses and agrarian economy; vi) trust of overseas Pakistanis, who are senders of huge remittances, has not been restored; vii) non-existence of National Policy on Development of Industries in general and indigenous cottage industries in particular.

Administrative failures include: A) violation of merit system in selection, posting and promotion of all civil servants, non-accountability of inefficient and unscrupulous officers etc; B) corruption and corrupt practices in the fields of Forestry, Tourism and Agriculture as there are no adequate National Policies on Health, Education, Water, Agriculture and Forestry sectors; C) extensive cutting of forests with impunity and with no corresponding action-oriented national programme for plantation to offset the effects of deforestation, D) non-attention on construction of roads on hilly areas to make the tourist spots accessible to the tourists from within and without, and E) agriculture being backbone has virtually become the most neglected area because national institutions like NARC and PARC have become materially dysfunctional, no meaningful work is being done regarding mechanised farming, on-farm research, modern methods to increase productivity and value added production of crops like wheat, rice and fruits like citrus and dates for export.

It is alleviation of poverty and revival of middle class that will help make Pakistan a welfare State.

The newly-elected government has though diagnosed a number of causes and tried to find out medication to cure the same, yet it is not enough. CPEC needs to be used as anopportunity to boost up the economy through installing indigenous industries from Silk Road to Gwadar creating employment opportunities for our own people. Though UAE and other countries have come in to make huge investments in various sectors and Saudi Arabia has, during the recent visit of prince Muhammad Bin Salman, signed as many as 7 MOUs for investment in various sectors like minerals, oil refinery, and petro-chemical industries etc., yet we need to have proper follow-up framework for implementation of all these programmes. We need to have long-run policies, policies which should not stand derailed in case of a change of government in consequence of general elections as these policies must form an integral part of the national interest.

The author of this article is a lawyer and partner at UMR Practice

Published in Daily Times, February 20th 2019.


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