The Pakistan Economy Watch (PEW) on Thursday said impact of political struggle has become unbearable for the masses and business community.
Perpetual political struggle and friction between institutions has been dragging economy down and there is no respite in sight, it was said.
The stalemate with the judiciary has hampered the government’s ability to take effective steps aimed at recovering the economy, said Dr. Murtaza Mughal, President PEW.
He said that every day Pakistan is being plunged further into a state of general insecurity; indicators are pointing at a meltdown of the public institutions; sovereignty of the state is jeopardised and country is turning into a failed state.
Government which has frequently been accused of mismanagement and inefficiency has failed to address the economic challenges, augment investor confidence and attract external financial support, he added.
Mughal said that weaknesses of the government are adding to the external vulnerabilities and debt sustainability.
Pakistan may face another downgrade if political environment worsens which many believe has become unavoidable, he warned.
He said that resumption of the held up coalition support fund will not help Pakistan in the long run in absence of focus of our leaders on the structural reforms.
However, Mughal said, the CSF funds will help the government to reduce dependence on domestic borrowing.
Criticising the performance of FBR, he said that failure of this institution to collect funds has forced the government to borrow from banks which has left productive sectors with little options to raise funds.
Borrowing is not only stocking inflation but also forcing the central bank to keep interest rates high which is detrimental to the economy, he added.
Mughal said that the government is yet to tackle energy shortages, reduce cost of credit, restructure public sector entities, revive investment, create jobs, increase agricultural and industrial production and do something to contain political uncertainty.