Tuesday, February 1, 2011

An economic mess

That the Pakistani economy is in tatters is no secret. However, what is being kept a secret is exactly how the government plans on remedying this economic free fall. Prime Minister Yousaf Raza Gilani has, of late, been running from pillar to post to convince the public that the government, its economic team and the political parties are elbow deep in consensus and dialogue to chalk out a ‘comprehensive’ economic reform plan. In a recent meeting with senators in Islamabad, the PM assured all stakeholders that an economic turnaround was imminent. He also met the Board of Investment (BOI) Chairman Saleem Mandviwala to assure potential investors of the government’s commitment to safeguard foreign and local investments, aimed at boosting the country’s economic welfare. All this sounds very good, but traditional rhetoric is not going to get us anywhere. Pakistan has come to a state where, until solid results are not seen, no one will believe that this new round of efforts to revive the economy will bear fruit.

In this entire scenario, the ordinary people are worst hit with prices of commodities getting out of their reach. Alarmingly, reports are filtering in that the health ministry is looking for a massive seven percent increase in the prices of various medicines. Only the over-burdened masses will suffer if this move is approved. The International Monetary Fund (IMF) is withholding the next tranche of cash promised to us because of the government’s failure to get the reformed general sales tax (RGST) approved by parliament. Therefore, a mega 50 percent cut in the country’s development programme as part of the new economic plan has been proposed. How does the government hope to get the economy back on track without money being spent on vital infrastructure such as roads, bridges and the uplift of rural areas is beyond comprehension.

The country is devoid of electricity and natural gas. Industries are shutting down left, right and centre with the textile industry going bankrupt because of irregular power supply. The Obama administration is discussing a preferential trade access programme for Pakistan in the Congress, especially for its textile sector. If the Congress approves this programme, it has the potential to provide a boost to the economy by creating jobs. It remains to be seen what we will export when the industry is shutting down due to the inability of the government to develop our power resources and infrastructure.

The PM can attempt to assure potential investors, but the fact remains that they are highly suspicious of Pakistan’s security and profitability. Daily corruption scandals traced back to the incumbent government are sending red signals to all those who could inject the country with a healthy dose of investment. Until some concrete plan is approved with transparency and accountability being main priorities, no investor will come to our aid.

It is bordering on vulgarity that in a country where the flood victims are sleeping out in the cold without food, warm clothes and shelter, the PM recently gave the go-ahead for luxury parliamentary lodges that will cost the national exchequer a dizzying Rs 3 billion — a move the PML-N is opposing. When the government is contemplating cuts in development, when the masses are facing massive inflation, when even simple medication might become out of reach and when electricity and gas have become privileges, such trivial pursuits further disillusion the public and the investors.

It is time the government introduced some credibility to its words by following them up with actions. No exports or new investments are possible without addressing the issues at hand.

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