LAHORE: The country’s economy cannot run on speculations or exemptions. There has to be a solid basis to pursue every policy with a contingency plan in case the policy fails to measure up.
The current government began its term with promises to eliminate corruption, attract foreign investment and take the economy to new heights. The objectives were good, but its economic leaders lacked the expertise to achieve them.
The economy was in free fall during the first 100 days of this government’s mandate. It was followed with the idea of â€‹â€‹finding huge reserves of oil through offshore drilling. The impression was created that this hidden treasure was being exploited for the first time, although two previous attempts taken seriously by previous governments also failed.
A leading global oil company has partnered with two state-owned oil companies to explore for oil hidden in the sea. The impression was given that the foreign company would bear all exploration costs of around $ 300 million.
However, when the project was shut down after failing to find oil, it was revealed that only a third of the expenses were borne by this foreign investor and 2/3 by the two state-owned companies. The speculative hopes of financial independence thanks to this discovery were shattered.
Next, a new governor was inducted into the State Bank of Pakistan (SBP), which served at the International Monetary Fund (IMF). The governor brought up the concept of attracting foreign investment through the investment of foreign funds in the country’s treasury bills.
The proposal was extremely attractive to foreigners as they could invest millions of dollars in 3- or 6-month bonds at the high interest rates prevailing at the time.
They could then resume their dollar investment with interest. That hot money evaporated as soon as the pandemic hit the world, and interest rates almost halved as a result.
The Prime Minister then had the idea of â€‹â€‹eradicating rural poverty by providing poultry to rural households. He conveniently ignored the fact that poultry farming is only possible for large farmers who protect their stocks from all disease in closed sheds that are ventilated 24/7 by electric fans.
Free-range chickens always remain vulnerable to deadly viral diseases. In addition, the cost of raising small stocks of chickens was very high.
This experiment failed miserably.
The SBP now offers overseas Pakistanis several times higher world interest on dollar accounts opened in Pakistan. Deposits exceeded $ 2.4 billion.
We’re paying around $ 168 million in interest on these accounts while the aggregate supply on that amount is around $ 24-48 million.
The deposits are not consumed according to normal banking laws, but go to the treasury. These deposits would evaporate due to the pressure on our economy.
We are pursuing a dual policy vis-Ã -vis the IMF. We are committed to eliminating subsidies as part of the IMF program, but subsidies have actually increased over the past three years.
There are many subsidized programs for young people, the poor or students. The government operates free meal outlets and shelters across the country.
In order to appease the IMF, the state has increased electricity and gas prices. Many lower middle class families are demoted to poor status because of these increases.
The economic disorder still censors the country’s currency. The rupee is now trading at Rs 173 against the US dollar.
A person earning Rs 50,000 in 2018 would earn $ 390.6 (at the then dollar value of Rs 128). Now the same amount of Rs50,000 equals $ 289).
A family in this income bracket was in the lower middle income segment in 2018, but now this family is classified as poor. Inconsistent economic policies have taken their toll with the common man in Pakistan and less than 10 percent rich and upper middle class all are classified as common people.
The state has lost its mandate. There is no price control. The adulteration of products has increased.
Electricity and gas thefts are on the increase. Corruption has reached its peak in government departments. Law and order have deteriorated like never before.
The documented area has shrunk further. The percentage of educated unemployed is three times higher than that of less educated unemployed.
The prices of all edibles have broken all previous records. Drug prices are beyond the reach of most patients. Deaths due to malnutrition and inability to purchase medicine are on the rise.
Foreign investment has almost evaporated; local investors are reluctant to come forward.
It all happened because state policies failed to deliver on government promises.