Economic Travails

Pakistan stands nowhere on the global indexing of productivity, unless we double the productivity in one year through efficiency and effectiveness.

Ghulam Murtaza

The 23rd March is the day when the seed of Pakistan was cultivated by adopting a resolution in 1940 for a separate country for the Muslims of this part. The founder of Pakistan visioned a thriving and independent new state free from corruption and bigotry, where the rule of law would prevail.

But Unfortunately, we got directionless right from the beginning, and resultantly condensed shadows of insolvency overtook us like dodder plants. This is not only financial bankruptcy, but we have also been in moral bankruptcy, which is more than all. Should a country with countless natural resources, a big chunk of youth, and a matchless strategic location deserve these humiliating circumstances?

I think, No! Then why? We must ask this question to get the answer, not to any economist but to ourselves. We need to change ourselves, and the seed of the change is realization and resolution, the similar resolution we did 83 years ago.

It’s still not impossible to retrieve, but this needs a strong will and mindset to do only the right things to the best of our conscious. Some thoughts come to me as convalescing steps listed below.

Pakistan stands at an unprecedented grinding halt in every dimension a country might have. Our ethical standards and sense of un-realization are the zeniths of our great fall.

The terms and conditions are humiliating and very hard against which IMF agreed to help us to forward the default to the next episode. Default is still hovering over our heads as six months are not so far off when we have to re-knock the door of IMF. Imagining the conditions of the next episode of IMF sets my body shivering.

The dollar has been uncapped on the demand of the IMF and Rs. 170 billion taxes have been imposed on the existing taxpayers. It’s been the tradition of the Government to axe the existing handful of tax-payers instead of expanding the tax net.

In Pakistan, the single-digit GDP tax ratio is a mockery. In a population of 240 million, only 2.154 million are tax-payers, not even 1 percent of the total population; the genuineness of the declared amount is another big question every one of us knows. Out of a total of 2.4 million retailers, only 25000 are tax-payers that too in three big cities.

Poor governance and irrationalities are countless. Illustratively, comprising 352 acres of Islamabad club worth more than Rs. 1000 billion rupees, just paying Rs. 27000 to the government, more or less the same loot is going on for other state holdings. The panicky situation has furthered the smuggling, hoarding, and stoppage of remittances by expatriates under the fear they might be frozen, like in the early 90s.

Alarm Bells Ring

Unfortunately, we are still not sensitized about the situation we are going to face after six months. We have given a lot of national assets and partial sovereignty as collateral to the creditors. Only a miracle can save us from the looming economic collapse. We can immediately need to consider the following steps to avoid falling into the black hole.

Panicky situation aggravates the conditions, and everyone hoards invests in a commodity which creates artificial demands and inflation, or transfers the foreign currency to safe heavens. Expatriate stop remittances. Concrete measures need to be taken to eliminate panic as a rudimentary step.

For a long period, we have been feeding our sick units by extracting the blood of the masses to meet the loss of those white elephants. These assets have become liabilities that need to be privatized as early as possible. Only 44 SOEs can transform the economic landscape of the country. The total loss of these enterprises is said to be about 10% of the GDP.

And if these assets give 10% profit, its compound effect would be 20% of GDP (60 billion) dollars. It may be noted that state-owned business enterprises have a worth of $119 billion. What is the harm if we pay off our debts by selling all the sick units? The benefit is we can save the debit servicing amount to 36% of the total national budget; low input will enhance the regional industrial competitiveness and the size of our export basket.

Expatriates should be given a market rate against their remittances which will discourage the hundi hawala. At least a 10b dollars effect may be experienced.

Housing societies have not only grabbed our green land bringing us on the verge of food insecurity but also dumped trillions. Had they invested in the industry, provided jobs to millions, and scaled up the GDP. The prices of plots would also be in the affordable range of a common person. This investment could easily add about 20b effect to the national economy.

Gwadar and CPEC are the most immediate projects for FDI, but they, too, have become uncertain and politicized. Just give confidence and mental security to the investors. We have to do nothing but make the existing investors our marketers and see the results.

Amnesty scheme may be announced for the black dollars.

Allow the private sector to generate electricity by constructing mini dams. India overcame this by extroverts and getting the private sector on board.

Cuts in non-developmental expenditure and austerity is the utmost. The United Kingdom has only 45 state vehicles, and we have 150000. The non-combat defense budget may be reviewed without compromising the combat portion.

Circumstances demand a complete ban on luxuries and non-essentials. Another big spending on imports is our online shopping and spending while we are abroad.

Localization and technology transfer must be ensured while granting licenses for manufacturing to foreign entities like India. Had the foreign companies promoted indigenization, today they were not suffering from important issues. There is no check on the price and transfer in Pakistan.

Smuggling should be eliminated with iron hands. No mercy should be for the smugglers damaging the industry, national exchequer, and sovereignty.

Expansion of the tax net is a must if we wish to avert the default. At least 20 million new payers should be brought into the tax net instead of extracting the existing tax-payers over and over. It must be coupled with ease of doing business, minimizing departmental cognizance.

After land, gold is the commodity wherein we have dumped the money. The time has come to introduce the 16-carat gold in Pakistan. Both gold and real estate need solid and revised policies.

Ban functions of more than 50 people is a win-win situation for all. The money can be given to our daughters or sons despite lavish spending to show off. Govt must ensure in their true letter and spirit to cap the spending on marriages.

Likewise, dowry must be declared a criminal offense against the groom and his father. This is not an economic issue but also a social evil that has forced millions of daughters of the nation to turn their hair grey.

Pakistan stands nowhere on the global indexing of productivity. We have to double the productivity in one year through efficiency and effectiveness.

We need to come out of the pressure not to buy cheap oil from Iran and Russia. Our total import bill of petroleum is 23.4 b; a 15% discount means a saving of 3.5b.

We need proper legislation to cap the size of the houses for the Government officers and ministers. Dwelling in homes of acres is a mockery to this poor nation, the majority of which lives under the poverty line.

These are the measures we can derive immediate economic relief and can avert the default for sure. Only a strong will is needed to execute them.