KARACHI: To try to make sense of Pakistan’s current economic crisis and the threats to its economic sovereignty, Ziauddin University organised an interactive session titled ‘Our vision of Pakistan: impediments to development’ where experts came together to offer insights into the way forward.
The keynote address by renowned economist Dr Kaiser Bengali outlined how the economic trajectory that the new government has embarked on is littered with decades of institutional decay and rampant corruption; the path forward to make Pakistan economically sovereign requires urgent and intensive interventions without which no positive results can be achieved.
“With Pakistan’s external debt having crossed $100 billion, the sword of debt hangs over our head. Why and how have we reached here? Two gaps have contributed to this — the dollar gap and the rupee gap. Data shows that there has been an absolute decline in exports and imports have fallen too,” said Dr Bengali.
Dr Kaiser Bengali calls for urgent steps towards making Pakistan economically sovereign
When such gaps existed in an economy, there should be another financing source, he said, adding that Pakistan’s only other financing source was remittance which alone could not overcome such a big gap and was causing a huge haemorrhage of dollars.
“Unless we plug this loss, our economy will remain under threat. Sources of dollar outflow must be curtailed and inflows must be created. Pakistan Oil Limited is the largest item in our import bill which drains our foreign exchange. One quarter of our import is just oil. Furnace oil and diesel alone account for 70pc of the total oil consumption. Furnace oil is primarily used for electricity production and if the state decides to use the coal available at Thar which should last around 200 years, we will not have to import furnace oil and can limit the haemorrhage of dollars,” said Dr Bengali.
Diesel consumption is also very high because 95 per cent of inter-city transport is done by trucks. “Since we stopped using trains, Pakistan Railways has deteriorated. No transport service profits from passenger service; it is cargo that reaps profit. We took away cargo transport from the railways and expect their passenger service to be successful. NLC took away cargo service from the railways which led to its decline; NLC has destroyed railways and corruption can solely not be the reason behind this decline,” said Dr Bengali.
Trucks also consume 30pc more fuel per km than railways. “If we return intercity goods transport back to the railways, we will import at least one quarter less diesel,” he said.
Dr Bengali regretted that all the loans taken in the past few decades were not currently being used for development but merely to pay off other loans or supplement the country’s reserves. As a result, he said, nothing concrete had been developed in the country and the progress internally as well as on an international level had been stunted. “Major development projects made with the aid of loans and which changed the economic geography of the county were prevalent till the late 1970s. After that nothing of note has been developed or built,” he added.
Dr Bengali urged the new government to avoid falling into the trap of cosmetic changes and to plan long-term strategies for an economically viable Pakistan.
National and international relations expert Dr Huma Baqai put the onus on the youth of Pakistan to stand up and ask the right questions from the powers that be. “This culture of discouraging critical analysis and asking questions by using labels such as traitors will create a lot of problems for the future of the county.”
State institutions that do not allow debate and critique in turn do a disservice to the citizens of the country, she explained. “The country has suffered on account of weak governments and those in power have let down citizens by relinquishing control to unsavoury forces that aim to destabilise the country by show of street power.” She said this in context of the new government’s stance on bowing to pressure and asking US-based academic Dr Atif R. Mian to resign from the Economic Advisory Council.
“When you lose economic sovereignty, you lose all sovereignties; it means your economy is on mortgage and unluckily we are at that stage because our state is not ready to take any responsibility. State should be responsible, brave and strong. It should have guts to take strong decisions for the people of Pakistan and for the betterment of our country,” said Dr Baqai.
The culture of the state not doing its job and allowing private entities to provide different services which it should instead provide was also severely criticised.
“Look at the philanthropic endeavours in this country, including schools for the poor and ambulance services. Though these are worthy services, it is primarily the responsibility of the state to provide these and we must hold them accountable by questioning them,” she said.
(This news/article originally appeared in DAWN on September 13th, 2018)