Pakistan is facing most serious and crucial time on ever deteriorating economy and there seems to be no recourse. The truth is not being told to the nation and entire state machinery is busy in diverting attention of people from main issue of economy to other non-serious issues. We remain undecided about our priorities and line of direction. To keep people busy they are engaged in old issues of less importance. We are reminded about threat of terrorism that is going on for years from across the borders, dacoits operating in Kucha areas in Sind and Punjab in which large number of police personnel have been killed due to defective and ill planned operations against dacoits armed with most sophisticated weapons, mantra of political instability since 2022, strikes by political parties and dharnas. Closing down Utility Stores, restructuring different departments by amalgamating in other departments. Issue of IPP’s. Giving examples of simplicity but setting no example to curtail the expenditures. Grand welcome to Gold Medal Winner in Olympics Arshad Nadeem. It is good to honor his achievement but look at the way this has been done special plane being sent, giving big awards money and dinners. No one is talking about economy which is nose diving with each passing day. Undeserving are being honored with national awards. These basically are diversionary tactical moves that are short lived and always prove counterproductive. Except economy all other issues are being debated on print and electronic media. A tragic accident by a lady who killed 4 people has overshadowed all other issues. The real issue of economy has been side lined. At present the Pakistani economy is plagued with high inflation rates, trade deficits, and uncontrollable debt. Ever rising debt levels, persistent trade deficits, political instability, and a lack of investment has created a real storm for the Pakistani economy. Large number of industries have been closed and thousands shifted to Dubai resulting in large number of people losing their jobs. According to data shared by the State Bank of Pakistan, as of January 2024, Pakistan’s external debt servicing burden for the next 12 months’ equals almost $29 billion. That is almost 45% of the country’s expected dollar income – in other words, income drawn from exports and remittances. The solution lies in improving the business environment, and allowing the private sector to have more space internally and also on the export side to overcome the crisis. Need to reduce power rates and burden of taxes without realizing its far reaching consequences. The rising costs of food, fuel, electricity, and imported goods are the primary causes of this high inflation and closure of industry.
Pakistan has faced political instability since its creation, cycling through periods of democracy and military rule. Of the country’s 23 Prime Ministers, not a single one has completed their five-year term, all either being dismissed on corruption charges or overthrown. As a result, the Pakistani economy has also had its ups and downs, and the COVID-19 pandemic, trade disruptions, and the removal of Prime Minister Imran Khan have not helped. The crisis has further deepened after Pakistan held its general elections on February 8th. It is alleged that there has been large scale rigging and Form 45 were replaced by Form 47 declaring losers as winners, even than it resulted in a hung parliament.SC decisions are not implemented by government if not in their favor, institutional gaps are widening.
The pandemic, the Russia-Ukraine conflict, serious floods, and political instability all had a hand in creating the current crisis. The inflation rate reached a record high of 38% in May 2023, and was approximately 30% as of January 2024. this was partly a result of the State Bank of Pakistan dropping its cap on the Pakistani Rupee-as directed by the IMF-subsequently causing rapid devaluation of the PKR. Consumer prices have risen by 28% since January 2023, which has made it hard for many Pakistanis, especially poorer households, to make ends meet. In June 2008 the dollar was Rs 68.17, in 14 years’ dollar was trading at Rs 177. Surprisingly in 16 months its value increased by Rs 101. Who got benefits must be investigated.
Pakistan’s massive debt and inability to repay loans from its tax collection is next to impossible. According to reports Pakistan is one of the world’s worst performers on tax collection, over and above the government is allowing the exemption of taxes on agricultural income and real estate. The government has also avoided aggressive tax policies out of fear of elite and powerful businesses. Among the IMF’s biggest debtors, Pakistan has the lowest tax revenue as a percentage of GDP, the lack of tax revenue ensures that there are not enough funds to revamp state-owned enterprises and improve public goods, or repay loans on time, which has led to increased borrowing and debt.
The government is also required to lower subsidies for the energy and utilities sector and instead increase taxation for the same. Reducing subsidies means that suppliers’ production costs will increase significantly, and because so many industries-including the energy and utilities sector-lack quality infrastructure, consumers are likely to face more frequent power outages. The government will have to implement more aggressive taxes perhaps beginning with taxing agricultural income and capital gains in order to significantly increase tax revenue.Overall, while the Pakistani economy is still in bad shape, it seems to be on the path to recovery. There is hope that the government efforts will be successful in aiding economic recovery subject to stoppages of extravagance at all levels and ensuring internal political stability is key factor failing which nation should be ready to face disaster in the making.
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