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Pakistan economy in long term ICU – Editorial

Why does Pakistan face financial and economic crisis every few years? This year Pakistan needs more than $20b to finance its external needs - and therefore the need of IMF! So, is there an issue in our economic structure to be fixed for once and all?

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A stark reality hit us in the face with a wham when we came across a currency table showing the value of the Bangladeshi Taka at 92.31, Afghan Afghani at 88.63, Indian Rupee at 77.76, and Pakistani Rupee at Rs206 (in open market). Some of you may remember the Pakistani expression used in Urdu lingua franca, ‘do takay ka’ (cheap or worthless). Its irony hits today’s Pakistan – former West Pakistan – and its leaders with the full punch of history in its face!

Pakistan’s economic crisis has been long in the making. Each government generally leaves a worse situation for subsequent governments to deal with; we can go far back in the country’s history to see this. Short-term respite for the country has come from ‘external’ help, money arriving in the 1980s from the Afghan War and in the 2000s after the War on Terror. Unfortunately, instead of learning to stand on our feet – these crutches were used by the country’s elite to continue to live life as usual and not make the significant changes that the country’s economic structure requires.

Regional competitors have moved far ahead of Pakistan, on most economic indicators, by making the difficult structural and other changes in their economy. India overcame its ‘ Hindu rate of growth,’ and former East Pakistan (Bangladesh), whose population West Pakistanis used to complain was a burden on the country, was able to implement population control measures. At the same time, Pakistan still languishes on a path to nowhere. The elite leadership has never asked serious questions – why has this happened? Mostly because they didn’t care, they continued to reap and plunder the benefits of Pakistan’s ever-smaller economic pie.

The country suffers from many issues, including succumbing to elite capture. The industrial class that has received subsidies or protection for decades has shown little initiative in conducting research and development or moving up the value chain in exports. Our textile industrialists – most even now are just able to make curtains or other such low value-added textile products. And what to talk of the automobile industry – protected for decades – that has ripped consumers off by giving them cheap, pathetic products at ridiculously high prices. Many have made abnormal profits from domestic market monopolies and had little interest in exporting their goods. Furthermore, the country has never been able to raise revenue from agriculture or land taxes because of the structure of its parliament being filled by landlords and industrialists. Similarly, Pakistan’s boom and bust growth cycle is an ongoing problem creating an unresolved balance of payments issue.

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However, calls by Prime Minister Shehbaz Sharif for a ‘charter of the economy’ have little realism. Political parties worldwide offer their citizens diverse visions of the economy and compete for power on this basis. Taking Pakistan’s case and generalizing, PML-N’s vision of growing Pakistan via spending on infrastructure model versus PTI’s Riasat-e-Madina vision are clear cases in point. The priority for each party is different, as is the vision they are offering the people. However, having said that, certain areas offer an opportunity for cooperation and agreement across all parties. One essential priority for the country that requires a cross-party consensus is the need to control Pakistan’s population, which is growing at levels much higher than others in the region and is unsustainable. By 2050 we will have a population of 380 million; this will create massive pressure on the country’s health, education, and other public infrastructure. It will compound the effects of climate change, making the country water-scarce and creating bigger issues of food insecurity. Similar agreement is needed on the creation of dams- essential for both water and energy security for the country that, unfortunately, has become a politically divisive issue between provinces as well. وو کون ہے جو اس کے بارے مے سوچے گا?

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