Economic hooliganism at its peak

Economic hooliganism is commonly perceived to have adverse effects on the country. Pakistan is not less than any other state, as here too, the ministers and their opponents always give statements substantiated with several research reports of their choice and official statistics.

The latest figures released by the Ministry of Finance suggests the economic recovery remained intact, keeping the economic growth on the upward trajectory not only for FY21 but also setting an optimistic baseline scenario for FY22, as well. But contrary to that the slowdown in the growth of big industries deepened with only 3.3 per cent increase in their output in the first five months (July-November) of the current fiscal year. The index remained below the pre-Covid levels, as it stood at 147.2 in November 2021.

The LSMI (large-scale manufacturing index) output increased 0.30 per cent in November 2021, compared with the same period in 2020 and 1.91 per cent, compared with October 2021, according to the Pakistan Bureau of Statistics.

Similarly, Pakistan’s trade deficit was recorded at $20.64 billion in the five months (July-November) of 2021, compared with $9.72 billion witnessed in the corresponding period of 2020/21 whereas it was recorded at $5.02 billion in November last year alone.

Pakistan is the net importer of petroleum products to meet domestic energy demands. The country’s oil bill sharply increased 113.39 per cent to $10.18 billion during the first half (July–December) 2021/22, compared with $4.77 billion in the corresponding half of the last fiscal year.

The latest escalation in the dollar demand due to the increased international oil prices offset the measures taken by the State Bank of Pakistan (SBP) regarding restrictions on realising the export receipts.

On January 5, 2022, the central bank directed the exporters to materialise their export receipts within 120 days instead of the previous 150 days. The rising oil prices may further weaken the rupee value in the coming days.

The rupee remained under pressure since the start of the current fiscal year due to higher external payments. It fell 19.18, or 14.35 per cent, from Rs157.54 against the dollar on June 30, 2021 to Rs176.72 on January 25, 2022. The rupee hit an all-time low of Rs178.24 on December 29, 2021.

The rupee stability against the dollar during 2022 may depend on the international oil prices and domestic demand for imported goods.

The large import bill and widening of the current account deficit remained major challenges for the rupee stability during the coming months.

Pakistan’s current account deficit widened to $7.1 billion during the five months (July-November) 2021/22, compared with the current account surplus of $1.87 billion in the corresponding period of the last fiscal year.

The unprecedented rise in the import bill is a major culprit behind widening of the current account deficit. The import bill sharply increased 69.17 per cent to $32.93 billion during the first five months (July-November) 2021/22, compared with $19.47 billion in the same period of the last fiscal year.

The rising import bill widened the trade deficit massively, which ballooned 112 per cent to $20.59 billion during the first five months of the current fiscal year, compared with the deficit of $9.72 billion.

It seems that to give strength to its notion, Prime Minister Imran Khan has tasked all his Cabinet members to propagate economic recovery at every fora, whether local or international. To lead the lot, Federal Finance and Revenue Minister Shaukat Tarin, Federal Energy Minister Hammad Azhar, Adviser to the Prime Minister on Commerce Abdul Razak Dawood, and several others paint a rosy picture of the economy what come may, while on the contrary, the opposition parties, especially the Pakistan Muslim League, led by Nawaz Sharif, has assigned his team the job to rubbish all the economic recovery claims of the government, creating a crises-like situation in the country.

The central bank data also shows improvement in the foreign remittances and foreign exchange reserves, due to which it was able to keep the interest rates at lower levels.

No doubt, these numbers largely support economic growth, but in reality, the common people are suffering the most, whether it is record fuel prices, higher prices of food commodities, including vegetables, fruits, pulses, oil, ghee, flour, etc, or electricity tariff and the continuous rise in unemployment.

At present, petrol prices have peaked to a record level of Rs147.83/litre as of January 31, 2022, while the rupee in the interbank market is hovering around Rs176.72 against the dollar and in the open market it is being bought and sold around Rs177.20 and Rs178.50. It is expected that it would further appreciate by the end of the current fiscal year.

Irrespective of the government’s claim of improved conditions on the economic front, several industries are raising voices against their inability to run their businesses with ease, and they are forced to shut down their units, resulting in a loss of jobs to hundreds if not millions of people.

The government is continuously painting a rosy picture, claiming that the economic recovery has started yielding results, despite the risks of the Covid-19 pandemic. It also said the economic recovery in Pakistan’s main exporting partners is making the external environment favourable.

It also believes that the dividends of positive market intervention may ease pressure on the prices and, as a result, inflation will decelerate in the near future.

But a set of people are accusing the government of inefficiency and mismanagement, saying it [the government] is just creating confusion by giving false statistics-based statements.

To add salt to the wound, it seems that both the ruling elites and opposition are not focusing on the betterment of the lives of the people by improving the economic conditions of the country, rather they are belligerent for coming into power again and again by hook or by crook.

It is now up to the people of the country to decide their fate, otherwise such “political hooligans” will continue to play with their emotions and completely destroy the country, which was attained after giving innumerable sacrifices.

(The writer is the Assistant Editor, Business Desk at the BOL News. Views expressed by him are his own and do not reflect the newspaper’s policy)