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Tuesday, February 7, 2023
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Pakistan’s Economy: A scaring scenario ahead?

The International Monetary Fund said on Sunday that the recent telephone call between Prime Minister Shehbaz Sharif and its Managing Director Kristalina Georgieva took place at the request of Pakistan, as both sides were expected to sit across the table in Geneva on Monday to “discuss outstanding issues”.

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It is appreciated that PM Shehbaz Sharif has contacted IMF. It shows his concerns and intention to resolve economic issues. Some experts link Army Chief’s Visit to Saudi Arabia as a step in this direction too. Although it is rather late, but, optimistic that the rulers have realized the adverse impact of the deteriorating economy of the country. For long many experts, and scholars have been advising Government and pointing out the dangerous situation emerging rapidly. Few have asked the army long ago to intervene and take corrective measures.

Pakistan is a resilient nation and can survive in any circumstance, it has the capacity to come out of any difficult situation. But, the more we delay, the more difficult it comes. Maybe the rulers pass on the adverse impact on the masses only and flee the country. What was in their mind? Why they kept silent while getting early warnings from intellectuals and experts? What was in their minds, or what was their planning, God knows better.

Read more: Pakistan economy in long term ICU – Editorial

Understanding the matter better

The International Monetary Fund said on Sunday that the recent telephone call between Prime Minister Shehbaz Sharif and its Managing Director Kristalina Georgieva took place at the request of Pakistan, as both sides were expected to sit across the table in Geneva on Monday to “discuss outstanding issues”.

An IMF delegation would meet Finance Minister Ishaq Dar on the sidelines of the Geneva conference, aimed at gathering international support for Pakistan in the aftermath of devastating floods last year, on January 9 (today), a spokesperson for the lender said.

Earlier, PM Shabazz confirmed that his government will fulfill all the requirements of the IMF and the installment will be released soon. However, “I told the IMF that we cannot put more burden on our masses. I also urged that the IMF should send its delegation to Pakistan for talks,” he said, adding that the delegation was expected to arrive over the next three or four days to discuss various issues.

Pakistan is keen to complete the 9th review so that the World Bank and Asian Infrastructure Investment Bank (AIIB) may also release their loans. The 9th review talks have been pending since October last year, resulting in the withholding of a $1.1 billion loan tranche. The prime minister had also said that Georgieva enquired whether or not China and Saudi Arabia were supporting Pakistan.

Although in the history of Pakistan has never defaulted, and to date, all payments were made on time. Despite of severe shortage of foreign exchange, Pakistan made payments to two banks in time. We are a proud nation and will not default deliberately. But, the situation is rather serious and the rapid depletion of foreign exchange reserves is alarming.

It seems the Government is still looking for ad-hoc relief, trying to knock on the doors of friends of Pakistan for borrowing more money. The focus is set on borrowing, which is beyond understanding.

Read more: Did Pakistan economy really progress under PM Khan?

Under current political and economic instability, friendly and brotherly countries are also reluctant to extend a helping hand so conveniently. Why not the rulers think about curtailing their lavish and luxurious living standards? Maintaining a huge team of Ministers, advisors, and special assistants is not necessary at all. China is a huge country, much bigger than Pakistan in all aspects, including area, population, resources, economy, etc., but is managing with 15 ministers only.

A statement by Interior Minister Rana Sanaullah confirmed that even foreign nations would not help without the IMF umbrella. “If we back out from this (IMF) conditionality, then our economic survival will become next to impossible and even our friendly countries cannot extend financial help to us,” Rana said in Faisalabad.

The way forward

The review talks are delayed because of differences over exchange rate policies, restrictions on imports, and demand for imposition of additional taxes, and increasing the electricity prices to settle roughly Rs. 500 billion in circular debts. Rana added that if the government tried to fulfill the IMF’s harsh conditions, those would jack up inflation and price spiral coupled with an economic setback.

Borrowing more will aggregate the problem further, will increase more burden, and may be more dictations. One aspect is to live within our own means, the other aspect is to think about the creation of wealth. The rulers should make friendly policies, introduce reforms, and provide enabling and conducive environments, the public is willing to work hard and generate revenue. There exists a huge potential for creating wealth domestically within our own indigenous resources. Pakistan is blessed with an abundance of workforce, unlimited natural resources, and plenty of opportunities.

Read more: Food security in danger: Pakistan Economy Watch

If the rulers are incompetent and cannot identify the right team for the right job, they do not deserve to sit on the steering. Let free and fair elections be held and let the masses elect the right people with the right expertise and qualification, who can run the country honestly and sincerely. For almost four decades, rulers were getting more loans with the expectation that the incoming government will pay them back. At the same time, some individuals or families were getting richer and richer, while the country kept on suffering, and the masses became the worst victims. Let the beneficiary of foreign loans pay back and the masses should not be punished with inflation and price hike.

We must avoid a situation, where we are being pushed, and we will be asked a choice between “Roti” (Food) and “Nukes”.

 

Author: Prof. Engr. Zamir Ahmed Awan, Founding Chair GSRRA, Sinologist (ex-Diplomat), Editor, Analyst, and Non-Resident Fellow of CCG (Center for China and Globalization). (E-mail: awanzamir@yahoo.com).     

The views expressed in this article are the author’s own and do not necessarily reflect the editorial policy of Global Village Space.