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Monday, January 30, 2023
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EditorialWay to fight economic gloom

Way to fight economic gloom

The federal and provincial governments’ reckless spending and the appalling performance of the Federal Board of Revenue (FBR) and provincial tax agencies to bridge the revenue gap have an impact on the fiscal landscape. The provinces got transfers under the National Finance Commission Award for less than budgeted amounts while the federal government is caught in a debt trap. Additionally, the provinces have utterly failed to collect the necessary agricultural income tax from wealthy absentee landlords. The government is trying to increase revenues and shrink the inflation rate, which has skyrocketed, causing the average man’s troubles to worsen. The Pakistan Tehreek-e-Insaf administration was then deposed in a no-confidence vote, and the opposition parties formed their government; since then, all members of the ruling coalition have been busy explaining to the public why the inflation occurred. Before taking office, these same individuals spent their days and nights persuading people that they had the answer to every issue and would stop inflation as soon as they had the chance.

The cash-starved government spent Rs 2.2 trillion, or 17% of its net income, on debt payments and defence during the first five months of the current fiscal year. The federal government’s net income was Rs2.04 trillion after allocating the provinces’ parts following the National Finance Commission Award.

All eyes are on friendly countries for help, which is also requesting that we first reach an agreement with the International Monetary Fund (IMF) before they can assist us. The government is working hard to keep the country from defaulting. Ministers say the IMF is the most involved in the economic crisis as raising gasoline prices and eliminating subsidies will cause inflation. The IMF, however, advises meeting the conditions first and seeking assistance later. The prices of the commodities will rise if the contract is followed.

The capitalist economy frequently experiences recessions. Positive and sustainable economic growth is not feasible, and there are business cycles in which expansionary periods are followed by contractionary ones. Due to its inherent characteristics, including credit expansion and contraction, speculative financial markets, and weak and unstable paper currency, the market economy is cyclical.

Pakistan’s foreign exchange reserves are not $4 billion, but $10 billion, according to Federal Finance Minister Ishaq Dar as Pakistan also owns $6 billion with commercial banks. As Pakistan is paying its debts on schedule, its foreign exchange reserves are at their lowest point in eight years and nine months. It is hoped  Saudi Arabia and other friendly nations will soon transfer money to Pakistan, stabilising the country’s foreign exchange reserves. Soon, an IMF group will travel to Pakistan. On the other hand, Shaukat Tareen, a former finance minister, urged that Ishaq Dar respond to the unprecedented increase in spending, which has not experienced inflation as high as it has in the past eight months in 70 years.

Other than the exchange rate and falling reservoirs, the shortage of flour is becoming worse in different places while federal ministers are busy using figures to impress the public and offer minimal solace. Government-provided low-cost flour is likewise getting harder to find. For the eighth time in just two months, flour prices have jumped in Lahore. The price hike on flour infuriated the Chief Minister of Punjab, who quickly ordered a return to regular pricing. The wheat that Pasco purchased has not yet arrived in Quetta. Additionally, there are rumours that the Ministry of Food Security has been activated to reduce the cost of flour across the nation. It will be recommended that Prime Minister Shahbaz Sharif distribute extra wheat to the provinces through Pasco upon his return from his trip to Geneva. According to officials, if flour prices increase, Pasco may transfer more wheat to the provinces.

It is a really sad scenario that the political leadership does not have time to score points even in these times of pressing issues. The administration should be concentrating all of its efforts right now on finding urgent solutions to the issues that have put the nation at risk of bankruptcy, but instead, it is continuously at odds with the opposition. The internal situation hurts people’s trust in democracy and the government. A state in such a circumstance is thought to be in a more dangerous condition than bankruptcy since its citizens will no longer trust it, but our political leadership does not give a damn about this. At this moment, the government’s top goal should be to take all necessary steps to limit inflation.

Instead of losing control and becoming hysterical whenever a crisis arises, it is always preferable to keep your cool and take instant emergency action to neutralize the immediate danger. The solution lies in the continuity of the system, and elections should be held on time to help stabilize the country’s political situation and allow the people’s preferred government to take charge. Optimism will not get us far during this gloomy time. While it is imperative to maintain the optimism of the country, we must also face the harsh reality that, for it to survive, we must all make sacrifices, maintain our sanity, and exercise our right to vote to instil the nation with the stability, discipline, peace, and prosperity that it so desperately needs.

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