Pakistan is going through an economic downturn that has taken a serious toll. The economic woes are mostly blamed on the pandemic raging through the country whereas the significant reason of this problem is pursuance of inefficient economic policies and this factor is conveniently overlooked. The portents are worrying and the people have been hit by a rummaging slide of inflation unbalancing the public welfare and economic outlook. It is worthwhile to ascertain that economic cycle moves according to a well-recognised trajectory. The repetitive economic woes in a country like Pakistan begin with the upheaval in external account position due to vast trade gap that in turn unbalances the retirement of national debts. Anticipating the downward slide the hot money rushes out unnerving the financial resource creating bourses draining out foreign exchange reserves hitting the purchasing parity of the local currency and the crisis it is in. The downward spiral ultimately travels downwards in a time period of six and ten months causing widespread closures of businesses and finally erodes the employment levels.
In case of Pakistan there are few mechanisms that can provide cushion to a retarding economic cycle. In better financially structures and regulatory systems, banks take the hit and their absorption of shock spares the common people to bear the brunt of inflationary pressure. But in Pakistan the banks are extremely insulated from foreign capital flows the jolt is very swiftly transmitted to the trade and industry that by implication exposes all segments of economic cycle and numbs the entire socio-economic matrix.
The most difficult aspect of an economic downturn in countries like Pakistan is the depressing long spell of recovery. Most worryingly the corrective measures always fall short of restoring the purchasing power of masses and the upwards spiral of inflation never comes down. Pakistan is therefore limping ahead with the economic downturn that has already pushed a sizable segment of its people down the poverty line. The country is painstakingly in the grip of an IMF programme premised on partly correct and partly fudged financial statistics that is singularly devoid of empathy. The inaccuracy of the figures provided to the IMF was mentioned by no less a figure than the PTI economic czar of the time who questioned them in a parliamentary committee meeting. The chilling career of this poster-boy of the ruling party is amply reflective of the downward spiral the economy is currently experiencing.
However, the most worrying aspect of the whole situation is that previous economic recovery a decade before took a painfully long spell of an equal number of years and proved extremely hurtful to the lower middle class that permanently lost the opportunity of owning their own housing and condemned to live in rented accommodation. The highly harmful recovery process in the past is certainly behind the attacks on the viability of the current IMF programme and it appears that Pakistan may be aiming to ask for certain waivers. It may well be possible to obtain them and Pakistani government may be working on the assumption.
Despite entertaining hopes of a much-needed reappraisal of IMF conditionalities the fact remains that the strong practice of misleading figures is rooted out from the system and the functionaries responsible for such misleading action must be held to account for the problems encountered by the economy now. It is quite clear by now that the economic difficulties were created by the financial team of the current government that had and still is trying to shift the blame to the previous dispensation. The faulty policies devised and pursued by these personnel have caused incalculable harm to the economic prospects of the country.
In the meanwhile serious consideration is required to be given to the large-scale manufacturing sector’s output that has limped badly bringing about a massive drop in sales of cars, motorcycles, trucks, buses and durables along with the sale of petroleum products. The deposit intake of commercial banks has also dried up giving rise to the parallel economy that has registered a steep increase in volumes. The domestic consumer base has plummeted and retail outlets are already shedding their workforce as they have already reported a 70% decrease in sales and the wholesale units are complaining of 50% falls in sales. It is abundantly obvious that the majority of Pakistanis have seen dramatic fall in their purchasing power and are deeply worried about the escalating cost of living. A vast number of Pakistanis are now uncertain about their job security and fear the worst to hit them shortly. The need for a thoughtfully revised economic roadmap with the view to arrest the economic downslide is manifest and efforts in this direction are required to be taken forthwith. There is no time to waste anymore as situation is getting from bad to worse. TW