As the Covid-19 pandemic is continuously taking a toll on human lives and material resources, we shall analyse how this virus will impact Pakistan’s economy, politics and way of life. With a population of 220 million and grappling with a huge external and internal debt burden which is almost equal to the size of its GDP, Pakistan’s predicament in the prevailing circumstances is how to save its economy from total collapse and prevent a dangerous political and social fallout.
The Prime Minister has warned of a lethal wave of the virus in May. Likewise, doctors representing the Pakistan Medical Association (PMA) and the World Health Organization (WHO) have also issued warnings against relaxing the lockdown because the worst is still to come. There is a massive shortfall in revenue from March onwards and the Federal Board of Revenue (FBR) predicts a huge gap in projected revenue and collection. If exports continue to fall and if there is a sharp decline in imports, the outcome will be a decrease in foreign exchange earnings from exports and customs duty and other taxes from imports. The worst-hit segment of society from the lockdown is composed of daily-wage earners and small- and medium-sized business owners. Together, around two-thirds of businesses and means of communications and transportation are still closed and the ‘smart lockdown’ will only have a marginal impact on resuming normal production and revenue generation.
The government announced a relief package of $8 billion under its Ehsaas programme for 12 million people who have been hit hard because of the pandemic and to provide relief to those whose businesses have been adversely affected. But, despite IMF’s special loan of $1.4 billion and another $2 billion sought from the World Bank, the Asian Development Bank and other multilateral agencies, one wonders from where the government mobilised $8 billion. Foreign exchange reserves held by the State Bank of Pakistan are now around $10 billion which are barely sufficient to cater to debt repayments and to cover the import bill for the coming few months. Even if there is some relief because of the falling oil prices and possible relaxation of debt repayment by lending agencies, it will be difficult for Pakistan to arrange resources for the annual budget of 2020-21 in order to meet government expenditures and cope with financial implications of the pandemic on the poor.
There is no other option for Pakistan and its people but to be ready for severe austerity. Unfortunately, for long Pakistan’s economy has been import-driven. As a result, the country has remained hand-to-mouth as far as spending on development and human security is concerned. In this pandemic, the shortage of ventilators and other items necessary for the treatment of Covid-19 patients prompted the Prime Minister to remark: “When Pakistan can manufacture nuclear weapons, why can’t it produce ventilators?”
Austerity measures must take into account three ground realities. First, the economic fallout of the pandemic will be catastrophic because the government will have to provide a second installment of several hundred billion rupees to the poor. The number of claimants will go up because of the extension in the lockdown till around mid-May. Those running private or public transport, and small- and medium- scale businesses have been adversely affected but were compensated with a relief package of Rs75 billion on April 27. But a relief of Rs12,000 for four months will only provide a temporary respite.
Karachi has been hit hard because of the lockdown as most of its residents are either daily-wage earners or small business owners and are now out of work. The small-scale traders association of Karachi has rejected the proposal of starting online businesses because of its impracticability and that it will benefit only 5% traders. Unfortunately, those responsible for dealing with the pandemic crisis in Sindh are unable to understand the predicament of the city’s residents. Not only has the Supreme Court taken note of “corruption and incompetence in the distribution of cash and relief items” to the needy people of the province, but traders have also reportedly accused the Sindh government of asking for bribes to allow them to open shops. The accusations have, however, been denied by the provincial government.
Second, the pandemic has given an opportunity to target those responsible for corruption and nepotism and promoting a culture of greed. If the people of Pakistan are to pay the price in the form of large-scale unemployment, escalation in the prices of essential commodities and rising poverty, the privileged class must also be held accountable and compelled to share the burden by donating their wealth to cope with the unprecedented economic crisis. VVIP culture and austerity cannot go together.
Regrettably, in almost two years of the PTI government, there has been no qualitative change as far as the culture of privilege is concerned. Despite the pandemic threatening the very foundations of economy and society, one cannot observe any change in the lifestyle of the elites who are far from ground realities. If the elites are under the impression that the prevailing crisis is like another 9/11 opportunity to grab as much foreign aid as possible, then they are terribly wrong because the richest countries are financially broke and unable to shower their wealth.
Third, on the flip side is the reality that people will not die of hunger because Pakistan has a rich agricultural soil and produces enormous quantum of food items. However, overcharging and excessive profiteering of food items, particularly during Ramazan, is quite obvious. It is also a bitter reality that people are not ready to change their habits of greed, dishonesty and corruption. If the country’s elites are not willing to end the VVIP culture, and the misuse of power, the common person is also not following a hygienic and disciplined way of life.
The UN has warned its member countries not to take advantage of the lockdown by suppressing human rights and augmenting the level of corruption. However, the Sindh government is being accused of corruption and misuse of authority. How can people prepare for tough times when a provincial government is being blamed for blackmailing industrialists and traders under the guise of SOPs instead of making the lives of people easy? Social tension is one outcome of the lockdown but what is alarming is the ethnic dimension of the crisis in Sindh, as the people of Karachi and Hyderabad, who are never given a majority in the PPP are enraged over the manner in which they are humiliated and exploited in the name of lockdown on ethnic grounds.
Certainly, under the cover of the 18th Amendment, the Sindh government cannot take a solo flight and challenge the writ of the state. If the crisis has exposed the competence, integrity and professionalism of those governing at the federal level, it has also unfolded ethnic and social fault lines in Sindh. What is required is a creative, innovative and united approach by stakeholders at the federal and provincial levels to deal with the fallout of the crisis.
Published in The Express Tribune, May 8th, 2020.
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