Hyderabad: Pasban Democratic Party President Altaf Shakoor has said that more external loans would further harm our precarious economy and the government should seek a home-grown solution to tackle grave financial issues facing the nation and country.
Addressing a press conference at the Hyderabad Press Club (HPC) here Friday, Shakoor said, “It is an open secret now that costly foreign loans are a sure recipe for disaster”. He said the lending foreign institutions not only receive heavy interest from us but also dictate our economy. He said the coming generations would suffer if the sitting government opted for more foreign loans. He feared that the ongoing talks with the International Monetary Fund (IMF) would only create a crippling financial slavery for this poor nation. Noted economist Dr Shahida Wizarat said, “The standard IMF policy prescription for countries faced with balance of payment crisis is to devalue the currency which through reduction in export prices is expected to expand the demand for exports. By making imports more expensive the demand for imports is expected to be reduced. With low demand and supply elasticities, the expansion in exports and the reduction in imports might not happen, as a result the trade deficit instead of declining, might actually widen”. She said devaluation by increasing the price of imports unleashes inflation, which the IMF tries to curtail through monetary tightening, resulting in decline in investments, output and employment. Although the fallout on the economy and the people is horrendous, the lenders and those drawing their salaries and pensions in foreign currencies stand to gain from devaluation. Dr Wizarat said IMF’s external sector strategy has been used unsuccessfully in Pakistan since the 1990s.She said the consequences of pursuing such policies are: One, it tries to bring about a ‘recessionary adjustment’ rather than an ‘expansionary adjustment’. Second, the strategy tries to impose ‘across the board’ demand restraint rather than ‘selective’ and targeted demand restraint. Third, the cost of adjustment is borne entirely by the middle and poor segments of the society. As a result of these policies the rate of growth of the economy has been adversely affected. The senior economist said the decline in growth rates is having a decelerating effect on personal incomes, business profits and government revenues. Moreover, manufacturing value-added as a share of GDP and manufacturing employment as a share of total employment have both declined during the 1990s. This phenomenon referred to as de-industrialization is actually a post-industrial phenomenon. Its premature occurrence in Pakistan along with the closure of 5000 industrial units, downsizing and restructuring of State Owned Enterprises (SOEs), decline in investments, migration of industrial units that have become non-viable due to escalation in their cost of production are rendering millions unemployed. Dr Wizarat said as a result of decline in the growth rate, employment rate and per capita income poverty are on sharp rise. She said these ugly manifestations of an unjust society are reflected in the form of manifold increase in cases of car snatchings, robberies, murders and two to three suicides daily reported in the newspapers. She said the focus of IMF strategy is on across the board reduction in imports and increase in exports instead of a targeted approach. Moreover, the IMF strategy passes on the cost of adjustment to the common people instead of those that have benefited from foreign borrowings. Dr Wizarat said we can finance the deficit in the current account without turning to the IMF. “I am making an attempt to provide an alternative to the IMF. The proposed strategy is not just an alternative, but a superior alternative, as it tries to close the current account deficit without incurring the tremendous cost entailed in the IMF strategy.” She said she has already formulated an external sector strategy that is a better alternative to the IMF strategy on account of the following: One, the current account deficit is adjusted without bringing about a recession. On the contrary, adjustment and economic expansion are brought about simultaneously. Second, the cost of adjustment which is quite marginal is passed on to the wealthy classes, who bear a nominal cost in the short run only. The short term measure proposed in this study is Selective Demand Management, which includes banning the import of luxury and consumer goods. Moreover, essential imports can be obtained on barter. Dr Wizarat said these steps will save a staggering $11.7 bn from the import bill (2016-17 import data), resulting in a massive reduction in the current account deficit. The medium to long-term measures include exploring substitutes for essential imports, exploring alternative commodities and markets for exports, repatriation of looted Pakistani assets, Gold Reserve Management Strategy, implementation of Cartegna Protocol on risk assessment and biodiversity and phytosanitary standards and charging market based rates for the use of our infrastructure and services. She said she has also recommended that agreements signed between the Government of Pakistan and foreign governments should be ratified by other state institutions to prevent rent seeking and corruption.
Pasban Central Vice President Rafiq Khaskheli said the rulers should focus on lowering joblessness by prioritizing the neglected agricultural sector. He said if the government opts for solar energy and drip irrigation based policies it would revamp our crucial agriculture sector. Pasban Democratic Party Chief Organizer Iqbal Hashmi said the government should promote a business-friendly culture in Pakistan and reduce the ration of indirect taxes. He said the tax net should be further expanded to that all wealthy people pay their due taxes. President Pasban Businessmen Forum Sheikh Waseemuddin said the Pasban has always raised a strong voice to augment our sagging economy. He said without a radical change in economic policies we cannot stand on our two-feet. He said the curse of costly foreign loans should be shunned for good. Pasban Hyderabad Chapter President Arshad Araeen said the government should pay focus on improving civic and industrial infrastructure in Hyderabad. He said the non-functional Hyderabad airport should be made functional on priority basis and local citizens also provide clean drinking water. He said public transport issue of Hyderabad should also be resolved.
Trending
- Neelum Jhelum achieves max capacity of 969 MW after TRT inspection
- BHC Jane Marriott hosts Iftar for 12 Faiths in Pakistan
- J Salik appreciates the Chairman CDA services for the minorities
- President Zelenskyy hosts Joint Iftar with UMC and AMW
- TI and NUTECH University Embark on Joint Venture to Redefine Technical Education
- President APPS&CA presides over the meeting of newly elected central executive body
- Palestine declares its intention to intervene in the case of South Africa v. Israel
- UNHRC publishes findings on Seven states