On a slippery path

It is from horse’s mouth now that the economy is in dire straits. The Ministry of Finance in its monthly update, which incidentally comes ahead of its fiscal closure, has painted a very dismal picture of the economy. It unequivocally says that there are risks and the economy is not performing. Some of the salient features listed out to enlist the messy situation are inflation which is in the range of, at least, 34-36%, as well as a sharp slump of around 12% per month in foreign remittances. Perhaps, these two factors are owing to pestering instability for almost a year, and the lack of political cushion to breathe in confidence. Last but not least, the fact that Pakistan has been unable to subsidise the price spiral factor in food and petroleum products has made it a killing affair. With purchasing power at rock-bottom and economic growth dropping to less than a percentage point from around 5.6% is a telling tale of our institutional collapse.

The point is where we will go from here. The risks cited by the ministry are worth evaluating, as they are too serious to be brushed under the carpet while we go on to jot down a budget for FY24. They are higher-than-expected expenditures due to rise in debt-servicing, damages from monsoon floods to the tune of over $16 billion and drop in FBR collection as it remained less than the estimated projections. This slowdown in economic activity has seen industrial production slump to negativity along with exports, making incoming of foreign exchange almost next to impossible while agriculture has picked up momentum but our convention of importing grains, edible oil and pulses makes the balance of payment worse to the core.

While the ministry hopes that things may get back to normality with the passage of time as international prices of oil and grains are on the downslide, it all depends on the managerial skills of our economic gurus. To this day, they have let us down, and have not passed on the benefit to consumers despite buying oil at cheaper and subsidized rates. This anathema of disgust must come to an end.

Published in The Express Tribune, June 1^st, 2023.

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