The state of Pakistan’s economy is fudged. There are a slew of mixed signals coming from the opposition as well as experts. Yet unity is found in discontent, with all fearing that the country will take its begging bowl to the IMF once more. This, despite having cleared $6.6billion in dues back in 2016. If this were to happen, it would be the 13th time that Islamabad has sought a bailout from the Fund in 30 years.
With all eyes on this summer’s elections, the rupee has devalued twice in just four months. Such protectionism may be behind the expected upward turn in net foreign direct investment (FDI) — about 60 percent according to the Board of Investment — for FY 2017-18. Nevertheless, making Pakistani exports cheaper in the long-term risks upsetting the balance of trade. For foreign nations ultimately become fed up with having to pay more in terms of exporting goods than it costs to import from here. Indeed, any country persistently selling below market prices may end up facing anti-dumping charges as per World Trade Organisation (WTO) rules. Experts are already warning that the currency devaluation may have exacerbated the widening of current account and trade deficits. Moreover, dollar reserves are said to have slumped to the lowest level in almost three years. And then there is the not un-small matter of a weakened currency offering less interest on loans, thereby boosting inflation. Presently, this looks set to skyrocket above February’s 3.8 percent mark.
Pakistan’s main opposition parties, the PPP and PTI, hold one man responsible for the fine economic mess that the country now finds itself in: Ishaq Dar, the former Finance minister. Indeed, the PPP has presented a charge-sheet against the ruling PMLN government while recalling that former Prime Minister Nawaz Sharif had promised to smash Pakistan’s begging bowl culture. Dr Nafisa Shah pointed out how the 10 percent devaluation of the rupee added $9.5billion (or nearly Rs1 trillion) to the national debt; adding that every Pakistani today owes Rs130,000 in debt. This was a figure also floated by Imran Khan.
So what is to be done?
The truth is that with elections less than six months away — this economic burden will be inherited by the incoming government. Meaning that the Centre is likely to wing it until then; especially if a return to the IMF is on the cards. Yet it is also the job of the opposition to maintain a constant system of checks-and-balances on the ruling regime. In other words, it is time that this culture of briefing the press instead of Parliament comes to an end. For where has the pressure been in terms of introducing urgent tax reform that will finally see the elite pay their dues? Currently less than one percent of those who should be paying tax are doing so. Pakistan’s tax collection machinery is rotten to the core and despite endless promises this government — or the previous ones — did little expand the tax net. Any economic reform must start with this basic goal.
Thus regardless of who forms the next government — the economic future of the country must be addressed on a priority basis. This should come in the form of a consultative non-partisan working committee on the economy. For if Pakistan does not take this seriously now; it will soon not be able to afford to.