Mounting economic worries

The official claim that the dharnas have so far cost the national economy around Rs600 billion appears to be rather exaggerated. The Constitution Avenue and the D-Chowk where the sit-ins are being staged are not known for being commercial or industrial hubs. The only commercial activity you see on the Constitution Avenue is the not-so-busy petrol pump located across the road in front of the Foreign Office. The D-Chowk, if not in use by some kind of a sit-in, is a cool corner of what is known as the Blue Area, but located at a respectable distance from its busy shopping malls.

The Imran-Qadri live shows broadcast nationwide on a daily basis by most of our mainstream TV channels start well past working hours hardly interfering with the commercial and industrial activities across the country. In fact, during evening hours the two sit-in spots turn into a lively marketplace with all kinds of vendors doing roaring business and the amount of unaccounted cash that the organisers of the two sit-ins are estimated to be spending for making the dharnas as comfortable as possible both for the audience and the leaders must be adding some tens of millions to our parallel economy.

Of course, the month long dharnas showing no sign of coming to a close any time soon certainly seem to have adversely affected the investment climate. Foreign investors seem to have gone into a wait-and-watch mode as the deafening noise bursting forth from the dharnas every evening has seemingly rendered it almost impossible to separate fact from fiction.

True enough, in the first week or so of the long march and the sit-in at Aabpara and Kashmir Highway a certain degree of economic disruption was evident at least along the GT Road patch extending from Lahore to Islamabad. But since then, most of the cost to the national economy seems to have come in the form of budgetary expenditure on law and order — the upkeep of around 30 to 40,000 strong police force, tear gas shells and rubber bullets. The large number of containers (belonging to private goods transport companies) used to stop the long marchers reaching their ultimate goals would also have cost the government a packet. However, this expenditure (one would like to know the amount to date) miserably failed to do the needful as the long marchers are now sitting at the very site the government had tried its level best to stop them from entering.

Now it seems the dharnas have become part of everyday life at least for the inhabitants of Islamabad. Late September and October normally are very pleasant months in the capital weather-wise. And while many across the country sitting in their drawing rooms enjoy the entertainment and information being blared out from the top of the two containers, D-Chowk has become a place for family outings in the evening.

While one would like to believe that the dharnas are not costing much to the national economy (unless proven wrong by irrefutable statistics), one is certainly worried out of one’s wits how a resource-short nation like us is going to cope with the escalating financial burden of the ongoing war — Zarb-e-Azb. The responsibility of looking after the one million or so Internally Displaced Persons (IDPs) is also likely to add to this burden hugely. And the still being estimated human and material cost of the devastation caused by the receding floods, too, is expected to be enormous.

One expects the government to complete the fourth review of the economy with the IMF under its existing Extended Fund Facility (EFF) programme when the interrupted dialogue with the Fund resumes. However, even with the continuation of a functional EFF programme, the country would still face a balance of payments crisis in the remainder of FY-15 as the current account deficit seems to be widening because of slowing exports and escalating imports. One wonders how, in such a tight situation, the government would be able to implement the promised policy reforms. On the other hand, the mounting burden on the budget because of the war, the IDPs, the floods and the dharna related law and order expenditure the budgetary deficit is not likely to remain within the IMF prescribed ceilings threatening the Fund programme itself.

Published in The Express Tribune, September 24^th, 2014.

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