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EDITORIAL: Setback to the economy

September 18, 2014 at 5:49 pm | News Desk


The first thing first: there is no threat to the democratic process in the country from the armed forces. It’s on record that the forces’ high command has exhibited extreme patience and helped the civil rulers in confronting serious challenges by conducting it through heavy waters of poor governance; yet the underlying tone of most of the high-decibel oratory in joint session of parliament was that the sit-ins at the D-Chowk are part of a ‘plan’ to wrap up the democratic system. The hard fact is that the sit-inners have challenged the government headed by Nawaz Sharif that enjoys a comfortable majority in the parliament, and is fully empowered to handle it. Perhaps, it is the common fear of being wrapped up, based on our history that has generated the commitment of unity.

If protesters’ demands had to be discussed and met outside the precincts of parliament then what was the need of a joint session of parliament, which has proved to be nothing more than a platform for lung-bursting speeches and a washing board for dirty linen. Good or bad, the joint session has done its duty; there is no danger to the government or the system.

The joint session may not have resolved the impasse and achieved something concrete but the sit-inners outside the parliament have. They have foment sufficient anarchy to force deferment of Chinese President Xi Jinping’s first-ever visit to Pakistan. Does the sit-inners leadership wants to test the strength of Pak-China friendship? At these trying times for Pakistan, China is ready to invest 34 billion dollars in a range of projects including power plants, rail-road networks, Karachi-Lahore Motorway and, Sinkiang-Gwadar economic corridor. There is not much in evidence to suggest that Imran Khan and Tahirul Qadri have appreciation of the damage that they have caused to national interest by creating a situation that President Xi had to put off his visit.

The protest — which sometimes looks like a carnival, complete with music and fun activities — appears to be an expensive exercise.  So far, the short-term financial cost on account of the political flux is projected to be Rs800bn — Rs300bn in capital market and Rs500bn because of the rupee’s depreciation (which increases the debt volume and leads to shortfall in trade and investment).

All other deficits [current account, trade] are compounded by the trust deficit. The low credibility of the government is reflected in the low [under 10pc] tax-to-GDP ratio”.

Moody’s and other risk assessment companies, which improved the sovereign rating from negative to positive have already threatened a review to Pakistan’s economic ratting.

The fear of instability also dampens investment prospects. While investors can discount other shortcomings, uncertainty in a country where the institutional base is weak is struck out of the possible location list.

However, bitterly critical of Nawaz Sharif and his coterie, argue that the Sharif brothers needed a jolt to become receptive and accommodating.  When the parliament becomes pliant, a display of street power to wake up the leadership from its slumber becomes necessary.

We wish and hope that better sense prevails and the issues are resolved on the negotiating table, and not on blood-stained streets.



News Desk

Economic Affairs Editor

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