LAHORE - When the PPP was in power for five years, the economy was in a very bad shape. The rupee was losing its value, as a result of which prices of various items were going up. The unabated flight of capital created a panic in the market and free fall of the rupee continued till the last day of the PPP government. Convinced that the PPP had no urge to arrest the decline, many believed that the situation would start improving after the change of government. The PML-N administration, they thought, would be able to put the economy back on track.
But the PML-N government has shattered all hopes of people in its first 100 days in power by proving to be a bigger disappointment than the PPP. During this period the economic situation has slipped out of its control and there is no light even at the end of the tunnel. Today the rupee is a worthless currency, just like Turkey’s lira of yesteryears. The writer is of the firm opinion that no improvement can be expected in the economic situation as long as worthy Ishaq Dar holds the portfolio of finance. Being a chartered accountant, he doesn’t know much about the basics of the economy.
He was “imposed” as finance minister only because he happens to be a close relative of the prime minister, which is the major consideration for appointments on all important posts. When Mr Dar was holding the same portfolio in 1997-99, the economy faced a similar difficult situation, which, at that time, was partly blamed on the negative fallout of the May 28, 1998 nuclear tests. In his private talks he had offered a “brilliant” solution to control it. “Let me fix the petrol price at a dollar a litre, and I’ll see how the economy doesn’t improve”. The foreign exchange reserves were depleting at a fast pace and the rupee was losing its value against dollar. And Mr Dar once said people should be happy that now they would get more rupees for one dollar. This only shows the mindset of the man who is supposed to turn Pakistan into an “Asian Tiger”, a term repeatedly used by the prime minister to emphasise that he would make the country an economic giant.
The present situation is totally in conformity with the mindset of our finance minister. The petrol price is close to a dollar a litre and with every passing day people are getting more and more rupees for every dollar – thanks to uncontrolled depreciation. Poor segments remember the finance minister everyday when they have to face the price hike. But he “fiddles” while rupee “burns”. The party leadership has given him a number of assignments, as a result of which he is left with little time for the portfolio which should be his top priority.
It appears that the government has no plan in mind to stabilise the rupee. And the plan it has, will not work, at least for the people. Because of this uncertainty, many people are converting their rupees into dollars – and thus the dollar is going up every day. The State Bank governor said recently that the government plans to take a loan of $625 million from private banks to build its foreign exchange reserves. The step, he claimed, would help stabilise the rupee. But economists have a different viewpoint about the likely impact of the move. They say that the rupee would continue to lose its value despite the loan. In their opinion, the agreement signed by the government with the IMF for a $6.64billion loan would be disastrous because of the strings attached to it. One economist is of the view that the best solution in the prevailing situation is that all leaders and overseas Pakistanis should bring their wealth back to their country. Once this is done, the country will not have to get loans on tough conditionalities. It is estimated that Pakistanis have between $200 billion and $500billion abroad. But the return of this money would be possible only if political leaders take the initiative. The prime minister should be the first to set this healthy precedent. This would raise the confidence of others and then former president Asif Ali Zardari, the Chaudhrys of Gujrat, parliamentarians, bureaucrats, traders and businessmen are expected to follow suit.
Unless the rulers do this, people will be justified in concluding that the rulers don’t have stakes in this country and are here only till they are in power. Another step that can be taken to raise the foreign exchange reserves is incentivising the overseas Pakistanis to invest their money in important projects at home. People wanting to contest elections should not be allowed to have accounts in foreign countries. In fact, there was a plan during the Musharraf era to take such a step. But, unfortunately, the man who was spearheading the move has changed his thinking. He contested the May 11 election as an independent but joined the PML-N after winning the seat. Now, he can’t say anything which is against the interests of the party leadership.