Attention spans being the length that they are, older crises are, quite literally, yesterday’s news. Consider: many IDPs of the military operation in Swat haven’t quite gotten back the lives they had left before the terrorists held them hostage. Consider also the plight of the victims of the 2005 earthquake. Neither of them hardly make it to the news anymore. This year’s terrible floods in Sindh may serve as a reminder – or, inversely, make us forget – about the terrible floods of last year.
Indeed, according to many, the 2010 floods, a crisis that had affected all four provinces, was the worst natural calamity in the history of the nation. The toll that the deluge took on the economy in particular is something that a recent report of the World Bank’s report focuses on. The bank estimates the total damage of the ’10 floods to be around $ 10 billion. The growth of the economy expected to be an already not-to-stellar 4-5 percent this year, is to slow down to a 2.5-3 percent. To put this into context: Pakistan needs to achieve an average of 7 percent annual growth in its economy just to absorb the additional 3 percent increase in its labour force every year.
Our current account position improved, yes, during this fiscal, owing to worker remittances and impressive export growth. But things are not so rosy on the fiscal deficit front. With revenues far lesser than they should be (the country has one of the lowest tax-to-GDP ratios in the region) and increased spending due to the infrastructure rehabilitation in response to the floods, security concerns and electricity subsidies, the government is struggling to stay afloat.
The answers to these conundrums are obvious but difficult to implement; some of them are difficult to get through, even the legislative stage. These are tax reforms (in the form of a revised GST regime), an abolition of unsustainable subsidies on electricity and petroleum products and a restructuring (disinvestment in some cases) in poorly managed state run enterprises.
