Pak economy
has become a source of major worry for every Pakistani as the worsening economy
is directly & indirectly affecting every faction of the society.
It is
surprising to note that our economy came under discussions by the various world
leaders on international forums. The speaker of National Assembly of Argentina
in recent IPU GENEVA showed his sympathies and concerns & was worried as to
how Pakistan will get out of this economic mess. It is unfortunate that our
worst growing economic conditions are creating negative perception all over the
world.
It has
become a political trend that every government changes previous policies and
such inconsistent economic steps dent the confidence of both local and foreign
investors. It is unfortunate for the nation that the financial institutions
like stock markets and State Bank have been heavily politicised resultantly
compromising their actions.
The
instability in the whole political, social and financial systems contributes as
the main cause of putting our economy in the doldrums where corruption also
plays a major negative role in the economic growth. Accountability institutions
have become subservient to the will of the government in power and cross the
thin line from accountability to political victimisation. Hence these have
listed its deterrent effects. I as former top law enforcer and subsequent as
interior minister will not be hesitant to say that the top appointments like DG
FIA/, Chairman NAB, Prosecutor NAB, Governor State Bank, Chairman FPSC and all four
provincial chief justices and Chief Justice of Pakistan must be vetted and
approved by the Parliament. It is also imperative that the constitutional
protection to the civil servants may be restored enabling them to do their jobs
on merit and not to the will of their political masters.
The role of
constitutional portfolios and bureaucracy are the real forces to push the
country to stability and economic growth. The basic setback is the growing
overload of debts on our economy. Our economy is drowning because even the new
government itself is the biggest critic of its own economy paying less
importance to put it on the right track. You cannot expect the economy to
improve when you are constantly spreading a negative image of it.
The loss of
control and lack of ability to set the economy on right track has shocked the
public in terms of sudden unprecedented depreciation in our currency. This
third time steep decline in value of its rupee has further hit our economy.
This latest slide of Rupee overnight has shaken the people and they were even
shocked to hear that their Prime Minister was claiming that he was not aware of
this decline of which he came to know through television. As former interior
minister it is hard for me to believe this claim unless it is presumed that the
financial system and intelligence system of the governments have been collapsed
and failed to inform such big negative development to the chief executive of
the country and Finance Minister including the President of Pakistan.
The Nation
needs to know who gave this shot of unprecedented devaluation of rupees and
what was the check & balance on such authority that was playing with the
fate of nation without fear.
There is
another question which needs to be responded by the government if this sharp
slide of Rupee was a secret understanding between IMF & Government, whereas
apparently one can assess that it looks to be a part of the deal with IMF to
devalue Pak Rupees but is being kept away from the eyes of public. If that is
so then IMF has won and common man of Pakistan has lost to the world economy
controller as IMF would further use its influence and we will see further
devaluation of Rupee and more increases in prices of essential-items.
These
uncontrolled economic jolts have shaken the stock market and the investors are losing
confidence whereas the government still has not set a clear direction to put
the economy on the right track. The nation would like to know as to how the
government will block the further slide of Rupee in coming days.
We are in
critical terms with IMF as it is continuing to impose tough conditions to bail
us out. The foremost usual conditions, being pressed by the IMF, are the
devaluation of our currency, increase in electricity price and increase in gas
tariffs and substantive increase in taxes. Unfortunately it looks like that the
recent decline of value of rupee was one of the conditions of the IMF, which it
has agreed in secret.
The
Government has put the blindfolds and by allowing the free float of the Rupee
it has apparently pre-qualified the country to sign an agreement with the IMF.
Parliament is blacken out totally about this agreement and any such secret
agreement will fire back in coming months which will further embarrass the
govt.
We have
jumped into liberalisation and privatisation that may result into massive
decline in investments, GDP growth, massive unemployment, massive increase in
poverty, and horrendous increase in crimes and finally the political crises,
which might bring the serious problems for the present government. A shaky and
weaker government cannot be decisive and will be unable to take solid steps to
re-energise the continuously falling economy.
We are
expected to hit the record high of rupees against 1 dollar if the Government
kept on working at this pace. The current rate of 140 rupees has already jolted
the whole nation so much that they are in huge panic and this irresponsible
approach is going to further damage the national economy
The State
bank is likely to start excessive money printing, which will lead to further
devaluation of the currency and it will further lead to more inflation and this
growing inflation will further price hike and common man will come under
unbearable pressure of price hike. Devaluation of Rupee will force the
government to protect the local trade, balance of payments deficit, repayment
for local and foreign borrowings and it will be difficult to maintain the
foreign exchange reserve intact. Currently, the foreign exchange reserves of
Pakistan stand at $16.95 billion which is continuously declining due to
uncontrolled Hundi / hawala.
Let us hope
the govt intelligently plays some role and concentrate to increase its exports
and cut the imported products. Let us hope that the government announces
foreign debt retirement programme to get rid of huge external debt of over $99
billion and it is going to be added up with the next instalment from IMF. We
have yet another liability in terms of Sukuk bonds to the tune of $7.3 billion.
These above factors are attributing towards more inflation and the present
inflation rate of 6.50% is likely to go up further building pressure on the
ever-growing volatile company.
The growth
rate is reported as 5.8% and we need to grow upward by boosting our agriculture
sector and pay more attention development infrastructure. Agriculture
contributes at present about 24 percent of Gross Domestic Product (GDP) of
Pakistan, which should be enhanced by increasing industrial production.
Our textile
sector is almost finished and our major production of grey cloth is declined in
the international market and our major export earning production has lost its
space in Europe.
Our economy
needs high potency of steroid in terms of strong revival factors to be inducted
by increasing our exports and cut down the import drastically. The government
needs to control the upward trend of inflation and work to increase the growth
rate. Further increase in debt will further bring irreversible dents in the
economy.
Once again
advocate for the adoption of Turkish model of Economy.
The Article has been Published in ‘’The Nation’’
on December 17th, 2018
The Link to Article is: https://nation.com.pk/17-Dec-2018/plight-of-pak-rupee
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