A massive restructuring of economic management

'Pakistan's economic management is being run through heavy and agonizing taxation system on poor masses which cannot be sustained on long-term.

Picture Source - AFP
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The significance of economy can be imagined from a famous quote, “economy is the start and end of everything,” for every sovereign state. Indeed, the strong economy is the source of national strength and form the basis for a knowledgeable and resilient work-force of a nation. In a highly globalized world, the significance of economy is further enhanced since it impacts the global relations among the nation states from the perspective of foreign policy, trade and security cooperation. Despite heavy taxes and exceptionally high levies on all goods and utilities in Pakistan, there are downward trends in the national economy since last few years. Despite being an agrarian economy, the essential food items are rapidly getting out of the reach for over 50 percent of the Pakistani masses. Inflation is record high and developmental sector is found wanting in all areas of socio-economic development of the state.

The educational budget of the institutions of higher education and public sector colleges and schools has been reduced to minimum level. The other sectors are equally facing the economic challenges. Indeed, not the resources but the poor economic management is considered to the real cause of deteriorating economy and falling living standards of its approximately 122 million population. In fact, the basic responsibility of the government is to identify and prioritize the problems facing the state and society of Pakistan. Identifying the problem areas at an early timeframe and focusing to resolve them by all possible means and through better economic management could have save the government from on-going economic crises. But, neither the problems identified nor any serious efforts were made to overcome the economic crisis, hurting the state and society alike. Resultantly, once confronted by financial challenges, they resorted to rush to IMF for a possible rescue.

The IMF and other international and regional financial institutions provide the finances with heavy interest rates and pre-conditions like impositions of heavy taxes and levies on to the masses. Adviser to Prime Minister on Finance and Revenue Shaukat Tarin along with the State Bank of Pakistan governor has negotiated with IMF for the resumption of loan facility for the next years. IMF has laid-down tough preconditions for the resumption of its loan facility. Earlier in 2019, IMF provided 39-months loan to Pakistan under the Extended Fund Facility (EFF). It was a total of $6 billion loan provided to support Pakistan’s economic reform programme. Despite this loan facility of IMF and other loans from many friendly countries, the incumbent government could neither reform the national economy nor did provide relief to Pakistani masses. Rather, the foreign loan has risen to $122 billion and people are facing extreme crises in their management under high taxes and increased levies. These are the figures of June 2021 which has further exceeded in the last three months. The external debt and liabilities (EDL) were $113 billion as of June 30, 2020.

In 2018, Pakistan’s external debt was $93.531 billion and $86.031 billion in 2017. These figures are sufficient to demonstrate the real picture of the government’s economic performance. Though the GDP of the country has been estimated to be over three percent for the fiscal year 2021/22 yet the economic state is represent an uncertainty and chaos even for the next fiscal year (2022/23). It is worth mentioning that, for the first time in the history of Pakistan, its GDP growth was negative (0.38 percent for the fiscal year 2019-2020) under incumbent government. The federal budget 2020-2021 was based on assumptions and presumptions and so was the engineering made with budget estimates for 2021/22. The outcome of this budget is now hitting-hard to everyone in Pakistan. The GDP growth rate for fiscal 2017-2018 was over 4.5 percent which means it was better economic management until 2018. Within one year of its takeover, the economy was handled so badly that negative growth rate appeared in Pakistan.

In 2017, inflation rate was 4.15 percent, which was further reduced to 3.93 percent in 2018. The inflation had risen to 6.74 percent in 2019 and reached to its peak (11.12 percent) in 2020 and is now again getting in double digits. In addition, poverty is all time high in Pakistan where number of poor people is increasing with each passing day as food items and basic necessities of life are beyond reach of a common man. This is the actual and grim economic situation facing the state of Pakistan where provinces and institutions are unable to manage their annual expenditures. Similarly, exchange rate of rupees versus American dollar (1 USD=174 PKR) is highest in Pakistan’s history. It remained almost constant from 2013 to 2018. Indeed, the government and its economic managers responsible to manage state’s economy could neither appreciate the looming financial crises nor took timely measures to avoid the financial meltdown. Resultantly, the country is heading towards an economic disaster which means a lot for the nuclear state like Pakistan. While Pakistan’s national economy is sliding downwards, there has been unprecedented mushroom growth of the various cartels in Pakistan. These cartels are controlling the prices and supply of all-most all critical food items and petroleum with or without consent of the government.

Indeed, the government has become hostage to these cartels. In most of the cases, these cartels are part of the government with sitting ministers, lawmakers and advisers. Despite investigations and proofs against their deliberate kick-backs and corruption, causing heavy losses to the national economy and undesired short supply of items in the market, they stand unaccountable and scot-free. In October 2021, through a new Ordinance of Accountability they have been given total impunity to legalize their corruption and losses they caused to the national economy. This NRO is specifically meant for the government ministers, cartels and those indirectly funded them and their private projects, including hospitals and other organizations. The NRO means the government is sheltering the illegal practices of its cronies who brought Pakistan to the level of bankruptcy. What an economic management by the government and highly-qualified and IFIs owned and trained team of the current financial managers who are busy to push the country towards economic devastation.

Currently, Pakistan’s economic management is being run through heavy and agonizing taxation system on poor masses that cannot be sustained on long-term. In fact, the economic management of nuclear Pakistan with rivalries all around and multiple fault lines within cannot be run like a corporate company nor can it be left at the mercy of inept and non-serious economic managers whose inclination is more to ruin Pakistan then profiting it. The way forward is; a massive restructuring of Pakistan’s economic management through serious, innovative and revolutionary steps with home-grown economic managers who are well conversant with national power potentials of the state. Let’s do-away with imported economic and security advisers, whose allegiances are more towards their former work places than Pakistan.