A deep analysis of our current economic situation indicates that Pakistan is confronted with a very serious macro-economic crisis. Continuous bleeding of our foreign exchange reserves has reduced the reserves from $24 billion in 2016 to a critical level of $15.1 billion at present, which can hardly provide sufficient cushion to cover our twin deficits of international trade and fiscal indiscipline. As such, top economists say our immediate requirement is an inflow of about $28 billion for the current fiscal year 2018-19.
Over the short term, we need to manage our import bill. Import of milk products, vehicles, edible oils, pulses, cigarettes, tea and cosmetics should be discouraged. Keeping in view the austerity measures, non-development expenditure should also be slashed.
At present, Pakistan’s economy is entirely dependent on foreign / domestic loans and the nation is trapped in a debt crisis. A visionary leader like Imran Khan, who will be the 20th Prime Minister of the Islamic Republic, has the “political will” and a capability to get Pakistan out of this crisis by utilizing the indigenous resources to the optimal level and enhancing tax revenue collection to make Pakistan a financially independent country. Otherwise, state sovereignty without economic stability is meaningless.
Furthermore, our civil society is divided into three main segments: rural, urban, and overseas Pakistanis. Although contribution of our home remittances by over eight million Pakistanis working abroad has proved to be lifeblood for the economy, many of their genuine demands have not been granted by successive governments as yet on the pattern of our neighboring countries. Effective steps should be immediately taken to provide proper guarantees and incentives to overseas Pakistanis who want to bring new technology to their country and invest in different sectors like corporate farming, industry, especially trade, to benefit from the CPEC flagship project of Belt and Road Initiative launched by the China to connect Asia, Middle East, and Europe. US President Donald Trump has already started the 21st Century Trade War with China, because of which Pakistan could also face the blowback of their economic tussle. Everyone knows that currency manipulation is used as a weapon for playing politics and weakening other governments by the only superpower. Latest warning of the US government to the IMF regarding the proposed bailout package for Pakistan can be cited as a classic example. Currency speculators can play havoc with the Pak Rupee, which has already lost almost 30 percent of its value since December 2017. Iranian currency case is another sample across the border for our new government.
Majority of our Pakistanis working in other countries belong to rural areas and Azad Kashmir but they find it difficult to remit their earnings to Pakistan through commercial banking channels because most of their important native places are unbanked. Therefore, Hundi and Hawala system happens to be their last resort for family support. Rural bank branches can now procure huge term deposits and receive utility bills as a safeguard against “Double Shah”.
Agriculture sector being the backbone of our economy, where 25 million of our labour force is employed, needs special attention by the new government. This sector can be better served with the construction of Kalabagh Dam, which, unfortunately, has been politicized by vested interests. The new government will be doing a great job by depoliticizing this project of national importance after a thorough examination of its technical pros and cons.
Preparation of “Actionable Plans” and Formation of “Implementation Teams” is already in the mind of the would-be-PM. The new government should give their job descriptions on priority basis. Experts from all relevant fields should be involved in the new projects to get better results.
In this context, the new Government should also honour their commitments about the following subjects:
1. Recovery of Stolen Assets, apparently shelved by the previous governments, should be expedited. The government should go out of the way to bring those assets to the country. The success on this front will enormously improve the state of national economy and help reduce dependence on foreign assistance.
2. Corruption-free Pakistan: The root cause of corruption in our politics is found in the gross violation of the basic principle of Rule of Law (applicable all over the world), that is ban on “Insider’s Trading” by public office holders. But politics in Pakistan has assumed the status of an industry instead of looking after welfare of the people. Law enforcement agencies should punish the culprits of this offence to protect the state of Pakistan from its failings in future.
The writer is a former banker & economist.