Pakistan faces bankrupt situation

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By Senator Rehman Malik

Pakistan is going through a bad patch of its history due to our inadequate economic policies which have created non-bearable heavy foreign and local loans leaving the country in a dangerous crisis. I was watching political developments in the country since last week, especially the slogans and speeches by the white-collar politicians of our country.

I have been raising my voice against the continuous depreciation of the rupee and increase in prices of basic food commodities, oil, and petroleum products and advising the government to take necessary steps but the government does not seem serious in addressing the country’s serious financial problems and its root causes. I am glad that some political parties gradually decided to take the lead based on my research. The public needs to know if it is a genuine move against price hike or the creation of some political fears/space through ‘fear technology’. This idea was used by me for the first time in one of my reports submitted to the then President Asif Ali Zardari while handling day-to-day statecraft and I will mention its context sometimes later. Briefly, fear technology has multiple uses in the intelligence world.

It is very disappointing to see hollow slogans against price hikes from some of the political elite class whereas no one among the elite political class could be seen on the stage or parliament to tell the world about the daily suffering of the public. Unfortunately, one does not appear to spot any representative of the poor, labour, and middle class around the elite political class who are fond of wearing expensive flashy clothes being covered by TV channels.

I predicted the fall of the Rupee for the first time when it had hit a low of the dollar to Rs115 and based on economic indicators growing currently, Pakistan is witnessing a record low of its currency against the US dollar and has fallen behind other currencies in the region proving to be the worst-performing currency in Asia. The value of the Indian rupee against one dollar is 74, Bangladeshi Taka is 85.65, Bhutanese Ngultrum is 74.27, and Nepalese rupee is 119 while Pakistan rupee is 175. My assessment of the fall of the Rupee was based on economic indicators which are predefined to set the parity of the currency whereas we are already tied with the dollar. It is sad to note that the countries in our neighbourhood have better value, progress and strength in their economy and unfortunately, Pakistan is running behind all.

Pakistan Stock Exchange, Karachi

Despite having less inflation and a better economy than us, the average wage of an unskilled person in India and Bangladesh is double. For instance, if the pay of a labourer in Pakistan is 15000, then in India it would be 34,050 while in Bangladesh it would be 29,700. Is it not high time for us to assess and compare ourselves as to what mistakes we are committing which are keeping us behind our neighbours and we need to revisit our policies which are dragging us into crises day by day. Purchasing power is important because inflation decreases the number of goods or services a common man would be able to purchase. The same is happening in Pakistan, inflation is on the rise, so much so that the purchasing power and capacity of a common man is going down by the day. There is a steep decline in the purchase of basic commodities in a common household in Pakistan due to inflation which means that the purchasing power of every Pakistan has been reduced because of devaluation of rupee.

Why are government ministers and responsible officials giving statements against the basic principles of economics and well-defined international rules and other internationally recognised parameters? It was hurtful to learn the statement of the governor of the State Bank of Pakistan; that the Pakistani Rupee’s depreciation is benefitting the families of nine million overseas Pakistanis. Such statements are childish, irresponsible and hurtful as overseas Pakistanis are not happy with the depreciation of their national currency. The people of Pakistan are deeply concerned at the rate at which the Pakistani rupee is losing value and inflation is rising rapidly.

ISLAMABAD: Eugenue Zhukov, Director General Central and West Asian Development Bank (ADB) discussing economic situation with Adviser to the Prime Minister on Finance and Revenue Shaukat Tarin at the Finance Division in Islamabad on November 09, 2021.

The price hike, inflation, and the growth rate are all correlated as inflation decreases purchasing power which affects business, investments and employment negatively. When businesses and investments in a country face regression, the growth rate automatically lowers. During previous regimes, poor people were at least given the liberty and resources to buy basic commodities, now the situation has become so miserable that even breathing has become expensive for them.

During the last three years of the PTI regime, the prices of ghee, oil, sugar, flour, and other basic food items have increased by more than 200 percent and inflation reached 9.5 percent which broke a 70-year record. Meanwhile, electricity rates have also increased by 57 percent from Rs4.06 per unit (in October 2018) to at least Rs6.38 per unit (in October 2021). LPG prices have seen a rise of 51 percent in the past three years and petrol of more than 49 percent. Among food items, the price of sugar increased from Rs54 per kg to over Rs150 per kg witnessing such a drastic increase, and the prices of lentils have also seen a dire increase.

We should commit half of the national budget to the agricultural sector and let the farmers of our country become economic soldiers. We can bring revolutionary changes in pushing our economy in the right direction. The Ministry of Labour and IT should be tasked to increase a hi-tech labour force and get into the tech industry with export targets.

Instead of making roads, do the proposals outlined above and we will be in a comfortable zone once we get high-yield crops and industrialisation. We certainly do not need sit-ins and power-hungry political moves but relief for the common man which will come with smart moves of right governance to bring the country back on track.

In the end, I advise all political parties and the government to get the motherland out of the crisis for the sake of its survival and future generations.

(The writer is a PPP Senator, former Interior Minister of Pakistan, and Chairman of think tank “Global Eye” and Senate Standing Committee on Interior. He can be reached at: rmalik1212@gmail.com, Twitter @Senrehmanmalik)