Political stability and economic growth in Pakistan

By Sultan Ahmad

The verdict of the electorate on February 18 is clear and the options for durable coalition at the centre and in the provinces are rather obvious. If some leaders are trying to get too much for themselves or their party, they may be disillusioned in the end.

But in a country with too many laws and regulations, prompt attention is seldom paid to the interest of the people or the needs of the country. Special laws stand in the way of what must be done quickly.

Meanwhile, urgent economic issues for the people and for the future of the country await prompt solution. The people have given their electoral mandate and want top priority for solving their economic problems.

The rich may be thrilled seeing the Karachi Stock Exchange surpass the 15000 barrier but for the poor what matters is the non-availability of atta and wheat or their availability at very high prices— along with rising prices of cooking oil

The economic committee of the cabinet has fixed Rs510 for 40 kg as procurement price for wheat for the coming crop while the ministry of food and agriculture has recommended Rs600. Some officials persuaded the ECC to reduce the recommended procurement price by Rs90 so as to “ensure the economic growth rate of seven per cent.”

The officials interested in higher growth would rather have recommended a higher procurement price instead of a sharply lower price. The role of these officials is baffling.

Various farmers’ organisations in the Punjab have demanded Rs800 for 40 kg as procurement price arguing that the world price is around Rs1000. And they deserve the world price In the prevailing circumstances, farmers may not sell their wheat for Rs510 for 40 kg but for a far higher price which the new government may have to negotiate.

The economic committee of the cabinet has decided to procure five million tones of wheat instead of seven million. The external sector problems are increasing. The deficit in the services sector’s foreign trade is $3.98 billion in the first seven months of this year while 22 sectors show a decline in exports.. The foreign direct investment has declined by 39 per cent.

The Qatar Cement Company has cancelled its plan to invest $225 million in a plant in Dhabeji (Sindh) as the Pakistan/Sindh government cannot prepare the relevant documents in time.

While the government has yet to fix POL prices to reduce the heavy subsidy losses, world crude oil price has exceeded $100 a barrel.

The government is too slow in responding to the aggravating situation. And Saudi Arabia has declined to provide oil on a deferred basis as in the past.

Malaysian palm oil prices have been rising pushing the prices at home and now Malaysia has declined to fix a quota for Pakistan. There was a time when Malaysia was proud to hail Pakistan as a billion dollar palm oil importer But now we have to struggle to get a quota of palm oil.

Steel prices are up and the Pakistan Steel is raising its prices sharply by raising the customs value of its products which raises the customs duty and the overall price.

Cement factories are doing very well and the Lucky Cement has recorded 31 per cent increase but will not distribute any dividend as it is raising more money from abroad through bond sales. However bond sales is facing resistance because of economic uncertainties at home.

The Asian Development Bank has asked Pakistan not to negotiate with other banks/donors while negotiating a loan with it for a power project.

Pakistan’s naval chief has spoken of India’s plans for the expansion of its navy and for acquiring new weapons and missiles. The new government has to look at this issue critically.

While the new government will take its own time to resolve the economic issues, terrorists are having their sweep in several areas.

They attacked the NGO’S in Manshera and the NGO’S have withdrawn from the area including the Pakistani NGO’s. In the south, criminals are having a field time and a gang of robbers robbed a bank of nearly Rs10 million.

However, the Federal Board of Revenue is pleased with its own performance. Its tax collection rose by 143 per cent of the target over the last four years. We are now told the government is having a problem planning the future economic growth because of the misleading economic data compiled earlier and promoted as real. This is particularly true of poverty reduction figures.

But the fact is those who came up with the alleged cooked figures are still in the government, advising it and acting as its spokesman. . Delay in the formation of the government is also delaying the transfer of officers appointed by the military rulers for their own purpose .The transformation has to take place quickly.

The economic uncertainty is also causing problems in the export of a billion dollars worth of garments.

Of course, higher economic growth is desirable and what can be achieved should be sustained but it should not be at the cost of the poor, nor it should be through promoting inflation in a country where plenty of untaxed and tainted money is afloat.

Equity demands that the poor get a fair share of the benefits of growth as the country becomes richer.

Courtesy: Daily dawn, 3/3/2008

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