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On the rocky path of economy

Col (r) Ikram Ullah Khan 

With an economic meltdown continuing unabatedly which has come as a corollary of the political uncertainty that has eroded the confidence of the people in general and that of the business community in particular, the country seems to have descended into a state of inferno and the public is made to undergo a harrowing experience after Shahbaz Sharif-led coalition government entered into an agreement with IMF in June this year to secure a standby arrangement loan that was badly needed to stave off an imminent economic default.

The agreement reached with IMF has come only after all its tough conditionalities were met which has resulted in a tempest of inflation. The caretaker government as expected, is taking the brunt of public anger and facing an intense public backlash when people are seen expressing their ire over inflated electricity bills and are giving vent to their wrath by holding demonstrations, burning electricity bills and chanting slogans against the government.

There is no denying the fact that political turmoil has left the country’s economy in tatters leaving the previous government with no option but to enter into a loan agreement with IMF which came as a bitter pill to swallow. Public has finally started feeling the heat of the tough conditionalities attached with the IMF loan that has eventually made itself appear in the shape of inflated electricity bills, unprecedented increase in petroleum prices making a triple century and resulting in a galloping inflation that has literally made it hard for people belonging to average income group to support their families and to make both ends meet.

The caretaker government, following in footsteps of the successive governments in the past, has thrown the blame at the door of its predecessor thus absolving itself from the responsibility, perhaps, justifiably so. But for public, it hardly carries any solution to their economic woes. They want immediate solution and not a few words of consolation. Irrespective of who is responsible for the economic fiasco, it’s ultimately the hapless masses which continue to suffer and face economic challenges.
It may not be palatable to the mind to know that the country is not out of the woods as far as the fear of default on foreign debt repayment is concerned, and the proverbial Damocles’ sword is still hanging over our heads despite securing a standby loan arrangement from IMF.

It makes relevance to mention here that the business community is the most unhappy lot in the country, to say the least. According to Gallup Pakistan survey recently carried out that included more than 500 businesses across the country, the majority of the businesses remain wary of the looming risks associated with defaulting on paying back the foreign loan which is snowballing with every passing month.

The survey report says that the business entities are pinning little or no hopes on the caretaker setup to find effective solutions to the problems of soaring inflation, continued devaluation of currency, ever surging utility bills, i.e. electricity and gas bills and the overall stagflationary situation the country has descended into.

The free fall of rupee, the imposition of exorbitant taxes and power outages are the main issues which irk the business community the most and have hit the business activities hard. They had to lay off their employees because of inauspicious business conditions. The Gallup Pakistan survey further suggests that the future business in the country is not very encouraging.

According to economic experts, ever rising inflation, inflated power bills, devaluation of rupee, exorbitant rise in petroleum prices and unreasonably high taxation have broken the back of people not only belonging to fixed income group but have shattered the confidence of business community as well. They are of the view that the big businessmen feel shy of doing business due to political and economic uncertainty gripping the country.

With the acquisition of the 1.5 billion dollar IMF lifeline loan in the last week of June and after the friendly countries including China, Saudi Arabia and the UAE released the much-needed loan, Pakistan’s foreign exchange reserves improved to 8.72 billion dollars in mid July from a mere 3 billion dollars. The reserves, however, have depleted again due to a decline trend in imports and an increase in current account deficit dropping to 7.5 billion dollars on August 25. This is suggestive of the economic crisis raising its head once again with the risk of default reemerging.

However, economic experts are of the view that there is no risk of an imminent default, though, the possibility of default within two years can’t be ruled out if sluggishness in economic progress continues and the much-needed economic reforms as suggested by IMF are are not made and the government fails to reschedule its mounting foreign debt.

Though, the overall economic picture portrayed looks quite grim, but sometimes you need to be cruel to be kind. However, there is no reason to feel pessimistic, as difficult times do come in the lives of nations but great nations don’t get into panic, rather face it bravely and manage to come out of it gracefully. When Sri lanka despite being in a much weaker position can come out of the crisis, why can’t Pakistan manage it which is a nuclear power and is in a much stronger position.

As a great and resilient nation, Pakistan has the ability to face the challenges courageously as it has done in the past, and tell the world that we can surmount even the unsurmountable. In this regard, as a responsible citizen, each one of us must chip in and contribute our bit to take the nation out of the economic challenges facing us instead of leaving it to the government alone to grapple with.

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