WE, in Pakistan, have perhaps got used to crisis, debacles, rough and tough times- both politically and economically. Seldom have we seen a patch of good and “tension free” time in our history of 77 years. Starting from a shaky political era after the death of the Quaid-e-Azam and brutal murder of Liaquat Ali Khan, the first Prime Minister of Pakistan and imposition of first Martial Law by Ayub Khan in 1957 in the country, till today we have yet to see “real good times” an ordinary citizen of Pakistan has been dreaming since independence in 1947. Poor economic and political decisions have brought this beautiful country to brink of disaster despite being endowed with awesome landscape, moderate climate for agriculture and four different seasons to attract tourism.
These are a few of the countless blessings of the Almighty on us. Yet we have been struggling to remain afloat due to wrong economic policy decisions, taken either by those who lacked necessary expertise or those who did not have mandate to take such decisions which eventually have brought our country to current situation, we are facing today. Those who ruled the country need to do some soul searching and look at the blunders, they have committed since inception of Pakistan. A quick comparison with our neighbours and other countries in the South East Asian region will perhaps speak volumes of our “adventures”, systematic loot, corruption and plunder which has been rampant, totally unchecked ,in the past and continues even today.
Pakistan has faced economic challenges due to various factors. Among the major factors for the debacle are the political instability, security concerns, flawed foreign and domestic policies, fiscal and monetary mismanagement, continuous negative balance of trade and balance of payments and, above all, unchecked and rampant corruption coupled with lack of accountability which has destroyed the institutions. Unfortunately the cancer and level of corruption has gone so deep in the society that there seems to be no way out to get out of this labyrinth.
Pakistan also faces several challenges to its economy, stemming from both internal and external factors notably political instability, weak governance, external debt burden and low revenue collection. Pakistan faced major foreign exchange crisis in 1990s due to high level of external debt and dwindling foreign exchange reserves. The Pakistani Rupee faced major setback vis-à-vis other major currencies, multiplying the already grim scenario we were witnessing and resulted in increased debt burden.
Low economic growth has long been our major dilemma. Pakistan has struggled to maintain high economic growth rates due to political instability, energy shortages, low investment levels and security concerns which have hindered economic progress. Fiscal deficit and external debt has also persisted since long, leading to rising public debt burden. The government’s expenditure always exceeds its revenue, necessitating borrowing which further adds to the debt pile. Inefficient tax collection system and widespread tax evasion contribute to revenue shortfall also. In addition, inflationary pressures have been a longstanding issue in Pakistan. Factors such as energy price hikes, currency depreciation, supply chain disruptions and food shortages contribute to inflationary pressures, eroding the purchasing power of citizens and reducing their standard of living.
Pakistan also faces high levels of unemployment and underemployment, particularly among its youth. Limited job opportunities, inadequate skill development programs and a rapidly growing population exacerbate this issue, leading to social unrest and economic instability. The government also failed to prepare a proper strategy/plan to identify overseas market for employment of our skilled manpower in countries which were and still facing chronic labour shortage. Our neighbouring countries took maximum advantage of this shortage through diplomatic channels but we failed to do so. Energy crises have plagued Pakistan since long. We have been struggling with chronic energy shortages, particularly electricity and gas since long. Insufficient generation capacity, outdated infrastructure, circular debt in the energy sector and inefficiencies in distribution contribute to frequent blackouts and hindrances to industrial productivity.
Another major challenge Pakistan is facing is the security situation. Hostile neighbours and internal conflicts and external tensions with neighbouring countries have adversely affected our economy. Terrorism, political instability and regional conflicts deter foreign investment, disrupt trade and impose additional security-related expenditure on the government. One of the major reasons of low FDI is the security concerns which prevent the investors to invest in Pakistan. While the countries in the region are thriving and witnessing billions of dollars of investment every year due to their “investment friendly” policies and excellent law and order environment and attracting a lot of tourism too, the situation in Pakistan, unfortunately, is opposite. In fact what we are facing and witnessing is flight of capital which not only gives wrong signals to investors but is weakening the already depreciated Rupee.
Water scarcity is another dilemma Pakistan is faced with. Water scarcity challenges due to a combination of factors including population growth, mismanagement of water resources, inefficient irrigation practices and climate change have also posed a major challenge. It is a significant threat to agriculture which is a crucial sector of the Pakistani economy. Basically, Pakistan is agricultural country and needs un-interrupted water supply. Water scarcity has left thousands of acres of land barren, resulting in low productivity thus adding to the list of crisis, Pakistan is facing.
Perhaps the most important and single factor which has damaged Pakistan and been responsible to bring the country to the edge and brink of default is the wide-spread corruption and governance issues. Corruption is pervasive across various levels in the state machinery and society, undermining economic development efforts. Weak governance structure, lack of transparency and bureaucratic red tape deter investment, hinder business growth and exacerbate income inequality.
Addressing these challenges require comprehensive reforms in various sectors, including governance, energy, taxation, education, and infrastructure. Additionally, fostering political stability, improving security conditions, enhancing regional cooperation, and promoting sustainable development practices are essential for Pakistan to achieve long-term economic stability and prosperity. This is not just one-man effort. The whole nation has to rise up and make a firm resolve to fight these challenges, collectively. Unless that happens we should not expect light at the end of the dark tunnel, we are in, presently.
—The writer is Former Civil Servant and Consultant (ILO) & International Organisation for Migration.
Email: [email protected]
Pakistan facing imminent economic turmoil
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0
08.05.2024
WE, in Pakistan, have perhaps got used to crisis, debacles, rough and tough times- both politically and economically. Seldom have we seen a patch of good and “tension free” time in our history of 77 years. Starting from a shaky political era after the death of the Quaid-e-Azam and brutal murder of Liaquat Ali Khan, the first Prime Minister of Pakistan and imposition of first Martial Law by Ayub Khan in 1957 in the country, till today we have yet to see “real good times” an ordinary citizen of Pakistan has been dreaming since independence in 1947. Poor economic and political decisions have brought this beautiful country to brink of disaster despite being endowed with awesome landscape, moderate climate for agriculture and four different seasons to attract tourism.
These are a few of the countless blessings of the Almighty on us. Yet we have been struggling to remain afloat due to wrong economic policy decisions, taken either by those who lacked necessary expertise or those who did not have mandate to take such decisions which eventually have brought our country to current situation, we are facing today. Those who ruled the country need to do some soul searching and look at the blunders, they have committed since inception of Pakistan. A quick comparison with our neighbours and other countries in the South East Asian region will perhaps speak volumes of our “adventures”, systematic loot, corruption and plunder which has been rampant, totally unchecked ,in the past and continues even today.
Pakistan has faced economic challenges due to various factors. Among the major factors for the debacle are the political instability, security concerns, flawed foreign and domestic policies, fiscal and monetary mismanagement, continuous negative balance of trade and........
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