News Analysis |
Former President and Co-Chairman of the Pakistan’s Peoples Party (PPP), Asif Ali Zardari has said the PML-N government has ruined the economy to an extent that it is on the verge of bankruptcy. “During the PML-N rule, the economy has plunged into deep crisis. The PML-N ruins economy every time it comes to power,” said Zardari while addressing a press conference at the residence of his party’s president in Khyber Pakhtunkhwa, Engineer Humayun Khan.
The 62-year old Zardari widely-known for his deftness in the art of politics hailed the economic profile during his party’s tenure from 2008 to 2013. “In 2008, when the PPP took over the government, the economic situation of the country was similar to the present one as the exports were hardly Rs 19 billion and foreign remittances of the country were Rs 9 billion,” Zardari said.
Pundits also argue that no political party will like to end its term by signing a bail-out package which will be akin to conceding inefficient policy-making. It is hence expected that the deal will be put off till the next elections
He added: “However, the PPP took the exports to Rs 30 billion and the remittance to Rs13 billion despite the global financial meltdown. Now there is no meltdown, but the country is facing challenges which are needed to be tackled with bravery and effective strategies.” He criticized the PML-N government for taking huge amounts of foreign loans and expressed concern over the country’s ability to pay them back. The younger-brother now turned political foe of the PML-N, Asif Ali Zardari has said that an economic emergency must be imposed in the country to extricate its fledgling economy.
Zardari’s criticism has come a day after the Army Chief, General Bajwa expressed his concerns over the skyrocketing debt that the country finds itself in. Alarm bells rang when the World Bank released a report warning that Pakistan’s external sector will not be able to sustain itself, saying that the country needs $31b to stay afloat and meet financial obligations.
A look at the data paints a worrying picture; the country’s current account deficit has risen to $12.1 billion from $4.6 billion in the last one year
“The current external situation can become unsustainable in absence of adequate policy response,” read the World Bank’s South Asia Economic Focus (SAEF) report. Pakistan, however, has rejected the report, saying that the country’s gross external financing needs stand at $18b as opposed to the claimed $31b in the report.
Regardless of the figures, experts believe that it is a matter of time before Pakistan will have to turn to the International Monetary Fund (IMF). A look at the data paints a worrying picture; the country’s current account deficit has risen to $12.1 billion from $4.6 billion in the last one year. The trade deficit which forms the main part of the current account increased to $26.8 billion from $19.28 billion in the preceding fiscal year.
Alarm bells rang when the World Bank released a report warning that Pakistan’s external sector will not be able to sustain itself, saying that the country needs $31b to stay afloat and meet financial obligations
Analysts believe that turning back to the IMF will underscore the fact that the economy is in trouble and needs a bail-out. This will be a political setback for the PML-N which is trying to sell its economic performances and claims of development. PML-N stalwarts are using this very data including the falling stock exchange to point to the fact that an uncertainty has been created by dismissing the former prime minister, Nawaz Sharif. They are disregarding the fact that their own government is still in power.
GVS talked to renowned economist and former Finance Minister, Salman Shah to get his thoughts on the current state of the economy. He said:”We should not politicize the economy by the unneeded demand for declaring a financial emergency.” Warning against such a step he said:”Doing so would plunge us into a dangerous downward spiral.” The former minister and professor said that things could improve with better financial management. He stressed:”The current slide is certainly manageable with effective financial governance, provided the ministry of finance can get a credible new leadership.”
Political analysts worry that this funding and rollover dependence on western institutions such as the IMF and World Bank will prove to be problematic, as they are influenced by the US, who can pull the plug on Pakistan, whenever it perceives as it going against US ‘interests’.
Furthermore, at a time when Pak-US ties are fraying, Washington could impede the grant of a bailout package to Pakistan. Pundits also argue that no political party will like to end its term by signing a bail-out package which will be akin to conceding inefficient policy-making. It is hence expected that the deal will be put off till the next elections.