Politicians have the capacity to put a rosy spin on just about everything. On the other hand, leaders of the businesses that power much of the economy have an altogether more realistic, and darker, view. This was on display by the president of the Lahore Chamber of Commerce and Industry last weekend. He said he had identified 25 sectors in which the trade deficit may be addressed and overcome, and he had stern words for the government — and its predecessors — about the way that the IMF had negatively affected the economy generally with what he called ‘interference’ in economic matters. It was necessary that those ‘at the helm’ revisit economic policymaking and perform the necessary adjustments.
The usually stringent conditions that the IMF attaches to its loans, including the recent rupee depreciation and increases in electricity and gas tariffs, contribute to economic infirmity and hit industry particularly hard. It was argued that the country is unable to take independent decisions that would allow the economy to grow and with external debt now at $85 billion and a large chunk of the federal budget spent on debt servicing the future was far from rosy. Turkey was cited as a country that was able to free itself of the debt burden, and that it was daunting but not impossible. It was not mentioned that Turkey is generally a tax-compliant state.
Those attending the Lahore moot know what they are talking about. With the end of the Dar era and the man himself dodging and weaving in London to avoid a return to Pakistan, the nation is without a finance minister, the portfolio being held by the prime minister. This is unacceptable. The businesspeople sent a clear message — the economy is close to a point of no return. Whilst that may be unduly pessimistic the recent rupee depreciation is going to hit hard, and there seems to be no plan to shed debt beyond incurring more to serve that which is already held. Political expediency got Pakistan into this mess and fiscal cowardice keeps us there. Listen to business.
Published in The Express Tribune, December 19th, 2017.
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