ISLAMABAD: PTI leaders currently incarcerated in the Kot Lakhpat Jail have raised extreme concerns about the state of national economy, highlighting the lack of economic restructuring steps as the country faces rising oil and gas prices due to the ongoing Israel-US attack on Iran.
In a statement issued by the PTI Central Media Department here on Tuesday, PTI Vice Chairman Shah Mahmood Qureshi, senior leaders Dr Yasmin Rashid, Ejaz Chaudhry, Mian Mahmoodur Rasheed and Omar Sarfraz Cheema warned that the macroeconomic stability achieved over the past three years, mainly by imposing financial burdens on ordinary citizens, could be lost within the next three weeks if the regional conflict continues.
They stated that the uncertainty and the shock from increasing oil and gas prices undermined the possibility of reaching a staff-level agreement with the International Monetary Fund (IMF). They noted that the economic situation was making it increasingly difficult to meet the performance criteria set during the current fiscal year’s budget formulation. It was emphasized that Pakistan’s economy, already fragile, was being further strained by external shocks and the absence of timely economic reforms. The PTI leaders urged authorities to take immediate and effective measures to address the economic challenges facing the country.
They sounded alarm that it was becoming increasingly difficult to meet the performance criteria agreed upon at the time of budget formulation for the current fiscal year, as exports remained sluggish and revenue collection far beneath the budget target. The combined effect of higher energy prices, rising freight/insurance costs, and supply disruptions, could reduce Pakistan’s exports further, they added. “Pakistan produces only one barrel of oil, out of the ten barrels of oil it consumes. If the global prices fluctuate around one hundred dollars per barrel, our import bill will increase considerably and our GDP growth will drop significantly. This will not just widen our trade deficit, it will intensify pressure on our foreign exchange reserves,” they noted.
They cautioned that rise in the price of diesel at the time of wheat harvesting and an increase in the price of gas at the beginning of the Kharif season with increase in the prices of fertiliser would hit the farmer hard. “Rise in the cost of two critical agricultural inputs will have a direct and immediate impact on agricultural productivity and purchasing power of the majority of our population living in the rural areas,” they added.
Cotton production, they pointed out, had fallen far short of government estimates, compelling the textile sector to rely on imported expensive cotton lint. A rise in the price of synthetic fibres due to an increase in the price of petroleum products will have a devastating impact on the textile sector, the largest industrial employer of Pakistan. “Our food imports have increased by over 18 per cent and our food exports have dropped by over 34 per cent in the first eight months of this fiscal year,” the PTI leaders said.
“Over the last few years, our remittances have exceeded our exports. They have become a vital pillar of our financial stability. They were expected to approach nearly 42 billion dollars this fiscal year. They play a crucial role in financing our trade deficit, servicing our external debt and supporting domestic consumption,” they said. It was feared that almost 55% of remittances were generated by 5.5 million Pakistanis employed in the Gulf states and prolonged instability in these states would slow down investments and tourism, reducing job opportunities for Pak migrant workers and obviously impacting their remittances. They said double digit inflation over the last three years eroded the purchasing power of the majority of population, as higher fuel prices would translate into higher inflation.
They said the State Bank of Pakistan through its monetary policy had forced the inflation down to 7%, which was on the rise again. A persistent demand of the business community for a reduction in the policy rate will be difficult to meet in the present circumstances, vitiating investment climate and business confidence further. “Investments in Pakistan from friendly Gulf states will have to be reassessed. Without ensuring security of Chinese personnel working in Pakistan, we will not be able to attract Chinese investments or promote industrial relocation of labour intensive industries from China to Pakistan.”
The PTI leaders said that rising wave of terrorism would have to be checked and the menace of foreign sponsored terrorism defeated. Governance and law and order have to be improved to attract meaningful investments into Pakistan.
“A shift from an annual to a monthly rollover of foreign deposits with the SBP is concerning, with the Gulf states distracted by the Middle East conflict and under the fear of global recession, rollovers will become increasingly difficult to re-negotiate,” they said and added that stabilisation achieved through an IMF prescription always resulted in slower growth, because these focus on managing the fiscal deficit. A country with a youthful bulge, rising rates of unemployment and a large section of its population living beneath the poverty line cannot afford the burden of wasteful government expenditure and wrong development priorities.
“Water ways should have been given preference over motorways. At a time when domestic fiscal discipline is critical, what message are we sending to international financial institutions by purchasing luxury aeroplanes and luxury vehicles for our ruling elite,” they noted.
“We need to re-prioritise our government expenditures and reflect over our political attitudes. If Pakistan has to move forward, political interests have to be subservient to our national needs,” they urged.
The PTI leaders underscored: “We have to understand and accommodate the complexities of federalism. Economic stability is linked to political stability. Current political environment and business as usual is no longer an option.”
