In a desperate attempt, Pakistan’s military leadership has stepped in to tackle the economic crisis, which is fuelling protests across the Islamic nation. Pakistan’s social fabric has been hit, with the poor suffering the most from skyrocketing food and fuel prices.
Pakistan’s army chief General Asim Munir on Saturday held a series of meetings with 50 prominent businessmen after protests by traders over soaring prices. In Pakistan, the all-powerful army has regularly been meddling in politics, but this kind of systematic interference in economics is rather new. Pakistani economists and experts IndiaToday.In spoke to are, however, skeptical about the military leadership’s role in trying to shore up the economy.
We are on an IMF (International Monetary Fund) programme, and it requires a lot of stakeholders onboard for success. If the army chief is willing to play this role, fine. But ultimately it is not helpful for any state institution to go it alone when there are going to be painful economic consequences,” Haris Gazdar, senior researcher at Karachi’s Collective for Social Science Research, told IndiaToday.In.
On July 12, the IMF approved a $3-billion bailout package for Pakistan, saving it from defaulting on its debt repayments. But it attached stringent conditions which forced Pakistan to cut back on fuel and power subsidies, making them pass on to hapless citizens. The condition of Pakistanis, already reeling due to runaway inflation and a nose-diving currency, has turned precarious.
Another economist, on condition of anonymity, said nothing should be expected from the military’s initiative. General Asim Munir assured the businessmen that the military leadership was making an all-out effort to bring in foreign investment worth billions of dollars.
Asad Sayeed, economist and researcher at the Collective for Social Science Research in Karachi, sounded ambivalent on the buzz of foreign investment in Pakistan.
“Some (foreign investment) may come through in the oil/gas exploration sector but not in agriculture or mining. We don’t see any background work done around these and there are too many interests that will create hurdles,” Sayeed told IndiaToday.In.
Asad Sayeed says Pakistan should stop chasing “magic bullets” to fix its economy.
“Rather than chase silver bullets, such as FDI from the Arabs or the Chinese, what is needed is structural reforms in taxation, energy, allocation of resources for export enhancement, among others,” he said.
The economic crisis is also fuelling an unprecedented brain drain. Pakistan has seen a record number of over 8 lakh people leaving the country in just the first six months of the year. Of them, a lakh were highly trained professionals, including doctors, nurses, engineers, information technology (IT) experts and accountants.
REASON BEHIND PAKISTAN’S ECONOMIC MESS
Historically, Pakistan’s imports have been more than its exports.
Pakistan’s economy tanked because for the last 40 years, it depended on the world to finance its deficits and did not build enough capacity for exports and substitute its imports, said economist Asad Sayeed.
“In other words, it lived off geo-political rents. For good or for bad, these rent avenues have now dried up,” added Sayeed.
Pakistan, with an eye on India, has also spent heavily on its defence sector. Will a cut in that help?
“There are already cuts in real terms, but it is hard to see massive cuts in any element of government spending which is dominated by emoluments to employees,” said Haris Gazdar.
