Clear signs
The Saudis helped prop up the rupee when it was needed and falling Brent helped get a handle on inflation at just the right time, but in the absence of a clear policy posture there was only one way the economy could go in the medium- to long-term – down. And that is pretty much what is happening. Almost half way through the present cycle, the government is clueless about jacking up revenue – something it had promised, repeatedly, during the campaign – to the point that the economy is beginning to tank just when IMF wants an aggressive non-traditional tax regime implemented immediately.
The record-low interest rate for a record-long period hasn’t helped either. It’s not bad enough that the government is obsessed with borrowing a large chuck of the available cheap money. It is that the cost of doing business is still abnormally high, despite the expansionary monetary policy. According to the state bank, private sector credit offtake has, in fact, declined to alarming levels in the last eight to 10 months. The odd sector that showed signs of life, like transport, owed the activity to the upcoming CPEC boom. And with prices beginning to show signs of an imminent upward march, the interest rate will have to be revised upward sooner rather than later. So the private sector led growth is simply not going to materialise.
That is not all. Recently exporters have also put the blame at the government’s door, citing ‘uneven playing field, regulatory measures, complex systems and procedures,’ and what not. But aren’t these just the problems that the government’s so called trade reforms were supposed to iron out? Now those reforms, just like revenue and electricity, seem to have been permanently placed under the dishonoured promises list. The government, meantime, continues with its mega projects frenzy, unaware of the economic breakdown just around the corner. At the risk of repetition: revenue is chronically low, so is growth, which is why deficit and unemployment will rise. The government should do something about it before it starts affecting its chances in the next election.
Does anyone care ? During the times a Dictator ( the first Dictator of Pakistan – Ayub Khan) price of sugar was raised from One Rupee a kg to a Rupee and four annas (25 paisas), the people started to raise alarm and called him 'chini chor'. Now the Finance Minister ( Dar Sb) wants to recover those Rs 40 bn from the poor families to fill the gap. Not only another 25 bn coming from the Gas sector to be recovered from the consumers in the name of – Un-known charges. Capitol is flying out of the country in billions of Dollars – daily (Ayan Ali's case one) and 200bn Dollars of Pakistanis lying in Swiss Banks – All black money. These Butchers will face Malekul-maut one day like did the Makhdoom of Hala and NO time to repent. Lie jao Qarze-pe-Qarza aur bharte jao apni jeben. These shameless souls.
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