By: Qamar Bashir
The current state of Pakistan’s economy is alarming, with several key sectors facing significant challenges. The electricity circular debt has ballooned to an alarming Rs. 4000 billion, while the national carrier, PIA, is incurring losses exceeding Rs. 800 billion. Furthermore, the state of electricity plants has deteriorated, contributing to inefficiencies and financial losses. Rampant electricity theft has resulted in losses exceeding Rs. 400 billion, exacerbating the financial strain on the energy sector.
Adding to the financial woes, corruption within government institutions, such as the FBR, has resulted in the embezzlement of over Rs. 300 billion. State-owned enterprises are also struggling, with losses surpassing Rs. 500 billion.
The consequences of these financial mismanagement are dire, disproportionately affecting the majority of the population. While a small percentage of the population benefits from these losses, the burden falls heavily on the remaining 90%, leading to increased taxes, utility charges, and commodity prices. As a result, the vulnerable population is experiencing a decline in living standards, facing challenges such as inflated school fees, transportation costs, and housing expenses, pushing them further into poverty.
The Prime Minister Shahbaz Sharif painted a bleak picture during his address at the inaugural meeting of the newly sworn-in cabinet. It echoed a similar sentiment to the speech he delivered upon assuming the premiership in April 2022. However, this time, there was a noticeable departure from scapegoating, as he refrained from attributing the country’s economic woes to the PTI.
Reflecting on our collective memory, we can recall countless instances where newly sworn-in leaders, be they prime ministers, military dictators, or technocrats, have delivered similar speeches promising to address the nation’s dire economic and financial circumstances. They vow to leave no stone unturned in their efforts to uplift the country. However, history bears witness to the rapid fading of these promises as they become immersed in the trappings of power and privilege.
Once in office, these leaders often prioritize the perks and prestige of their positions, neglecting their initial pledges. They soon confront the reality of entrenched systemic issues, perpetuated by powerful vested interests within the government, civil service, and military bureaucracy. These individuals benefit from the status quo and resist any attempts at meaningful reform that might threaten their own positions or privileges.
Should a government dare to challenge these entrenched interests and pursue genuine reform efforts, they are met with polite warnings to desist from disrupting the established order. If they persist in their efforts, they face the threat of being swiftly removed from power.
This cycle of promising change but ultimately succumbing to the pressures of the status quo perpetuates a vicious cycle of stagnation and decline, leaving the nation’s progress at the mercy of those who prioritize self-interest over the common good.
In his extensive address, Sharif reiterated his steadfast belief in the power of “hard work” to surmount the nation’s challenges. However, he also acknowledged the limitations of hard work alone, recognizing the imperative for innovative and creative solutions. He emphasized the importance of learning from past mistakes and, above all, addressing the underlying systemic issues plaguing the country.
In addition to the challenges highlighted by the Prime Minister, several other pressing issues confront the new government, casting a shadow over its ability to steer the country towards stability and growth.
The contraction of the real GDP, plunging to -0.2% in 2023, paints a grim economic picture, with projected modest growth of only 2% in 2024 offering little solace. The surge in the unemployment rate to 8.5% in 2023 signals deep-seated economic distress, with scant prospects for improvement in the foreseeable future.
Furthermore, the relentless escalation of the Consumer Price Index, which reached a staggering 29.2% in 2023, threatens to exacerbate the plight of ordinary citizens, with projections indicating little respite in 2024.
Compounding these challenges is the dwindling foreign investment, which trickled to a mere $2.7 billion in 2023. Meanwhile, the country grapples with a mounting external debt burden, soaring to approximately $126.3 billion by 2023. This fiscal strain is further compounded by a persistent fiscal deficit, oscillating between -7.6% and -7.8% of GDP from 2022 to 2024.
To add to the woes, Pakistan’s foreign exchange reserves have plummeted to critically low levels, hovering around $8 billion, posing severe constraints on the government’s ability to manage its economic affairs effectively. These daunting challenges underscore the urgent need for decisive and strategic action to stabilize the economy and foster sustainable growth.
Overcoming these challenges is undoubtedly formidable, yet not insurmountable. Numerous nations, grappling with severe economic and financial predicaments, have successfully resolved their underlying issues, confronted the proverbial “elephants in the room,” and propelled themselves toward accelerated growth and development.
However, in the context of Pakistan, these metaphorical elephants wield considerable power. They not only influence the selection of members in provincial and national assemblies, the Senate, the president, and the prime minister, but also dictate the composition of the cabinet. Any form of resistance or disobedience is met with swift and unforgiving consequences, as punishment is meted out promptly. The entrenched influence of these powerful entities poses a significant hurdle to meaningful reform and underscores the complexity of navigating the political landscape in Pakistan.
Furthermore, allegations surfaced suggesting that the electoral process was orchestrated to prevent Nawaz Sharif from potentially assuming the prime ministership for the fourth time. Subsequently, upon the formation of the government, key ministries were entrusted to unelected individuals. This composition sends a clear message: interference in the country’s internal affairs, financial and economic sectors, or the Special Investment Facilitation Council will not be tolerated. The strategic allocation of ministerial portfolios underscores the establishment’s intent to maintain control over critical areas and deter any attempts to challenge its authority.
With unelected technocrats, handling the economy and the finance of the country, the nation is bracing itself for another round of economic strain. The government has initiated a media campaign to manage expectations regarding imminent hikes in taxes, utility costs, and petroleum prices. This effort is packaged as a Ramzan Package, purportedly worth Rs. 12 billion, aimed at showcasing the government’s purported commitment to shielding the most vulnerable segments of society from the impending financial strain.
However, this move is a familiar tactic employed before the implementation of stringent economic measures. The provision of free ration, though ostensibly a gesture of support, is woefully inadequate to sustain vulnerable families for more than 15 days. It fails to address the systemic challenges faced by these families, leaving them vulnerable to hunger, deprivation of basic necessities, lack of livelihood opportunities, inadequate education, and even insufficient clothing and footwear.
Thousands of employees of State-Owned Enterprises are anxiously anticipating the potential privatization and sale of their employers, which could lead to retrenchments, golden handshakes, or terminations, exacerbating the already high levels of unemployment. The looming decisions have deterred the PPP from securing cabinet positions, as they seek to avoid public backlash and preserve their political capital.
Regrettably, the current government assumed power under a cloud of controversy, with allegations of electoral rigging and manipulation casting doubt on the legitimacy of its mandate. The opaque and unfair conduct of the election process has raised serious concerns about the transparency and fairness of the government’s foundation.
Given these circumstances, there are legitimate questions about the ability of a government that ascended to power through questionable means to instill transparency and fairness in the system. The lack of trust in the electoral process undermines the government’s credibility and raises doubts about its commitment to upholding democratic principles and governance. These lingering doubts present a significant challenge for the government in its efforts to enact meaningful reforms and gain the trust of the populace.
Qamar Bashir
Press Secretary to the President(Rtd), Former Press Minister at Embassy of Pakistan to France, Former MD, SRBC
