Money is the most skittish of commodities on the face of the planet. Money has wings. Cast “but a glance at riches, and they are gone, for they will surely sprout wings and fly off to the sky like an eagle.” This is exactly what went wrong. The PTI government has scared rupees out of the economy – deep into safety deposit boxes and rupees converted into dollars. Money has left Pakistan’s economy.
What went wrong? The gas tariff went up into triple digits. The electricity tariff went up into double digits. And the dollar went up into double digits. Consequently, the disposable incomes of Pakistanis went down sharply. And the purchasing power of Pakistanis went down sharply. People have stopped going to restaurants. People have stopped shopping at shopping malls. People have stopped buying and selling. This is exactly what has gone wrong.
The wheel of the economy has stopped turning. Transactions are not taking place. Businesses are shutting down. Companies are laying off people. At least 1.1 million additional Pakistanis have been laid off. At least 4.1 million additional Pakistanis have been pushed below the line of poverty. This is exactly what went wrong.
What went wrong? The PTI government remained singularly focused on the rear-view mirror. The economic Titanic, in the meanwhile, kept on speeding towards half a dozen icebergs – the Rs1,600 billion circular debt; Rs1,100 billion losses in public-sector enterprises (PSEs) and a couple of billion dollars worth of leakages in the gas sector.
What went wrong? The PTI’s economic team (was there any team?) failed to understand that tax collection is the consequence of economic activity. The PTI’s economic team (was there any team?) killed economic activity – and that is going to result in a historical tax shortfall of Rs485 billion. This is what went wrong.
Pakistan’s economy is in a state of crisis. Walks in the enemy; twenty-first century wars are fought in the social media with fake news and ‘innocent’ sounding narratives. The two masked objectives are: to incite a war among citizens of Pakistan; and to incite a rift between the citizens of Pakistan and their army. This is twenty-first century warfare.
Pakistan’s economy is in a state of crisis. Walks in the enemy; twenty-first century wars are all about remaining below the opponent’s radar, keeping the intensity below the opponent’s threshold, creating political chaos behind enemy lines, using weaponized information and weaponized financial instruments. This is exactly what is happening: Pakistan’s enemies are busy funding political chaos trying to make a Venezuela out of Pakistan. Yes, explosions are out, implosions are in.
Dr Hafeez Shaikh is up against formidable challenges – controlling the price spiral; restoring business confidence; negotiating a less painful IMF programme; bringing down multi-billion dollar leakages in the electricity and gas sectors. This indeed is a tall order; an order that requires a lot of out-of-the-box thinking. To be certain, the World Bank, the IMF – and the staff trained by them – are trained to go by the book. Going by the book will make things even worse.