In our seeking for economic and political progress, we all go up - or else we all go down

–Franklin D. Roosevelt

 

The Pakistani Tehreek-e-Insaf (PTI) government recently celebrated the passing of the Federal Budget 2019- 20 from the National Assembly of Pakistan with 176 votes in favour and 147 against. However, the challenges are not yet over, today the ruling party finds itself in the same position it blamed past regimes for, such as borrowing loans from international creditors, soaring inflation, dwindling GDP, falling exports, and a depreciating rupee, to name a few. As expected, the middle-class was pinned down with the economic burden in the form of direct and indirect taxation, in the budget 2019-2020. Previously when it was in opposition, the party made much noise about the economic woes and the plight of the poor, but today is responsible for tightening the economic noose on the vulnerable segment of society. Indeed, there is much to worry about where the economic condition of the country is concerned, because the current economic indicators as presented in the recent budget are extremely worrisome. The hue and cry about the deteriorating economy cannot be ignored, as our future is at stake.

An unprecedented hike in the dollar rate is currently being observed, nationally. The dollar is hovering at Rs 163/164, with estimations that the rupee will further depreciate. Instead of stabilizing, this week, a 5.8 percent increase was seen in the price of dollar against the rupee, in a single day, the highest recorded this year. What is more concerning is the fact that according to market experts, the dollar rate will reach Rs 180-200 by the end of this year, and will cross 250 rupees in the next five years. The questions arise that can Pakistan afford this? And who is in-charge?

According to the presented budget, the GDP is estimated to remain at an abysmal 2.4 percent, which is a massive decline from the estimated growth of 6.2 percent last year, and the revised growth rate of 3.3 percent. Inflation has already increased by leaps and bounds, and is estimated to remain between 11-13 percent, the highest since 2011, when it touched 11.5 percent. It will continue to soar, and the worst affected will be the poor and the middle class. To make matters worse, the economically vulnerable segment of society will further bear the brunt of it through indirect taxation in the form of price hikes in electricity, gas, and other daily life basic commodities.

Instead of plugging holes in the wretched economy, and giving immediate relief to the poor and the downtrodden, people are being advised by the government to have patience and bear the economic burden quietly. It is not only a condescending approach, but makes a mockery of the marginalized people who are barely making ends meet.

It is unanimously agreed by all stake-holders that documentation of the economy and broadening of the tax base are the need of the hour. It is understandable that the national coffers are empty, and the government is in dire need to collect revenue, but it cannot keep taxing the already heavily-taxed middle-class. The federal government with all resources at its disposal needs to come up with another plan to collect revenue which doesn’t squeeze the marginalized segments of the society. The rich need to be taxed. FBR needs to ensure that the wealthy and power corporations as well as individuals, pay their due share of taxes, because until and unless they are not brought into the tax net, this exercise will prove to be futile. The government needs to come up with a long-term solution to introduce reforms and collect revenue, one which doesn’t rely on imposing more taxes on the middle class.

It is no secret that without industrialization and improving the export sector, sustainable progress cannot be achieved. Much was said about how the China Pakistan Economic Corridor (CPEC) would serve as a cornerstone and revive industry in the country, but the reality says otherwise. The pace of the projects under the multi-billion corridor has slowed down considerably, owing to the uncertainty of policies in the country, and has damaged investor confidence in its projects.

Furthermore, the country’s export sector is almost non-existent. Pakistan’s exports are one of the lowest in the region. The government’s decision to withdraw the zero-rated status provided to the exporters, will further result in further dropping of Pakistan’s negligible exports which currently stand at $23.7 billion to $21 billion. Hundreds of jobs will be lost, and thousands of households will be impacted. The need to increase exports is important to stabilize economy. The government must rethink its policies which will damage the already frail and weak exports sector.

It is no secret that foreign direct investments are not coming into Pakistan despite the current government’s assertions, and empty promises. Although some encouraging announcements were made by Pakistan’s friendly countries namely the GCC, but they will require time to materialize. And time is something which Pakistan’s slumping economy does not have. Pakistan Stock Exchange is not faring well either. According to The News, ‘Pakistan Stock Market has suffered Rs 1,758 billion loss in the first ten months (from August 17, 2018 to May 13, 2019) of the PTI government.’ It seems the market has lost its confidence due to political instability, uncertainties, and the inability of the current regime to take timely decisions.

Internationally, the geopolitical situation is getting worse by the day. The US sanctions on Iran’s oil exports, the looming clouds of war in the region, the rising instability in global financial markets as warned by the International Monetary Fund, are all daunting developments which will have further elevate Pakistan’s internal and external woes.

In short, that there is no respite in sight for Pakistan, domestically or internationally, at least not in the near future. In less than two months the government will complete its one year in power. The blame-games cannot continue anymore. It’s time to own responsibility, because the country cannot afford incompetence any more. If Pakistan wants to develop a respectable and assertive voice in the international world, then it must focus on improving its economy. Without developing a strong economy, the country will not be able to assert its clout internationally. The political forces must come together for the country in these testing times.