The political polarization in the country is escalating. The two main political parties have directed their entire force towards the protection of their senior leaders from the tightening noose of the National Accountability Bureau to the peril of their mandatory role or moral duty in helping strengthen rule of law, making legislation to revamp economic and administrative institutions. We are caught in a whirlwind of noisy politics swirling around the accountability process with political pundits and journalists churning out, as usual, scenarios of gloom and doom. It seems we, as a nation, have not come out of our infancy always looking helplessly to the unpitying heaven for succour.
The economy of the country has been in a shambles since decades now. We have been living on dole-outs from IMF and foreign friends. We never learned to depend on our own resources. The country is beset with a grave economic crisis – certainly not of the present government’s making. It is a chronic one. exasperated by the previous successive governments particularly from 2002-2018 in their shortsighted recourse to heavy borrowing to meet the unrestricted overhead expenditures, plug the unchecked budget deficit and clear the skyrocketing losses of the public sector enterprises. These governments, instead of taking unpopular steps to restructure the economy, resorted to granting subsidies to food, transport and utility sectors, pumping cash into sick public sector enterprises instead of reorganizing and downsizing them. No visible steps were taken to bridge the gnawing gap between the exports and imports.
The Singaporean leader, Lee Kwan visited Lahore in 1992 at the invitation of Prime Minister Nawaz Sharif who wanted to follow his footprints to transform Pakistan into an economic tiger. We have always been full of bragging talk and short of substantive action. Mr. Lee Kwan addressed a glittering gathering of industrialists, manufacturers, businessmen and traders in the State Guest House. His talk was blunt eschewing euphemism. What he said betrayed his depth of study and the correct diagnoses of our economic malaise.
In his view, our extravagant, ostentatious and profligate habits both at the individual and national levels, acquired over the past 45 years, would require equal years, if not more, to change into a well-regulated, well-disciplined economy and a frugal way of living. He pointed out that the scarcity of resources, compounded by leakage, wastage, mismanagement, tax evasion; the capital flight; the chronic lack of investment in education, research, technological development and capacity building; the shy private sector; the falling foreign investments; the narrowing industrial base and administrative impediments to the flow of direct foreign investments, and above all, our diminishing sense of collective good were the main factors leading to our present economic woes.
We have all these negative factors in our economy – even in more palpable way after 27 years of his talk. No government can claim exception to the economic morbidity the country finds itself in. While the foreign loan of the country was ballooning, there was no reduction in our extravagant expenditures at the national level with any worthwhile increase in the allocations for education, research, technological development and capacity building. Corruption was galore in the senior decision making positions. The ruling clique was shy of going for the tough and unpopular macroeconomic management or structural economic reforms. However, they never missed any opportunity to fill the public sector enterprises with their voters and workers. Name any public sector enterprise, it would be found filled to the brim with workers – even some with fake degrees as in PIA. In developed countries such enterprises are closed forthwith or privatized instead of injecting funds to meet their losses.
Financial analysts suggest that 190 public sector enterprises (PSEs) have lost Rs.3.7trillion out of public exchequer over the past 5 years. The list of such money losing public enterprises is long and contains every enterprise of any public utility importance from Pakistan International Airlines to Pakistan State Oil, Pakistan Railways, Pakistan Steel Mills, Sui Southern, Sui Northern, Oil and Gas Development Corporation, Faisalabad Electric, Hyderabad Electric, Tribal Electric, House Building Finance Corporation, National Insurance, Jamshoro Power Company, Nandipur Power Project, National Transmission and Dispatch Company, Pakistan Trading Corporation, Utility Stores, Pakistan Agricultural Storage, National Fertilizer, Pakistan Television, Zarai Tarqiati Bank, National Bank of Pakistan, Pakistan Broadcasting and First Women Bank. One is just surprised to cast a look at the emoluments of the chief executives of these PSEs.
The losses of these Public sector enterprises have been on the rise every year. Dr. Saleem Farrukh has brought on record that in 2013, the PSEs lost Rs.495billion. This loss touched the whopping Rs.1trillion in 2018. PIA, Pakistan Railway, Pakistan Steel Mill have been the main loss making enterprises. The accumulated losses of Pakistan Steel Mill reached the staggering Rs.177billion in 2018. PIA has been losing Rs.45billion; Railway Rs.34billion a year. The expected revenue from the direct taxes in the current budget would be Rs.1.7trillion and the government has already lost Rs.3.7trillion in these enterprises over five years. The allocation for Defence affairs and Services in the current budget is Rs.1.1trillion much less than the losses of the PSEs. This should put at rest the concerns of some people crying foul that the budget of the country is consumed by the Defence and Services.
We have scores of public sector enterprise whose contribution to the economy of the country is nothing other than engaging a huge workforce at the cost of national exchequer. These PSEs are losing Rs.62billion every month of the year. This tax payers’s money would have been expended profitably for the development of our schools, colleges, technological development and capacity building, healthcare facilities and communication infrastructure. Pakistan spent a shamefully meager amount of Rs.550billion on education during the financial year of 2017-2018.
The political leadership knows the alarming economic situation which afflicts the country. The exports have stagnated at $25billion covering 40% of imports. Last year, imports touched $60billion. The budget deficit reached $30billion in the financial year 2017-2018. The expending spree of the last government pushed it to cross over 7% of Gross Domestic Product (GDP) necessitating borrowing from abroad. The tax-to-GDP ratio has stagnated at 11%. They have contributed to the creation of this economic morass and are now shamelessly papering over their lack of political will and courage to confront this monumental challenge during their terms in office. Politics apart, nations come to a crossroads where it becomes imperative for all segments of the population and instruments of state power to join hands to stand up to the menacing challenge.
The losses of the PSEs are to be plugged by reorganizing them along with the properties and assets they possess or privatizing them forthwith. We have come to know, over years, that the injection of precious public resources into these public sector enterprises is not a sustainable option. It could be an adhoc relief but not the permanent remedy of the affliction. The malignant lumps that have been consuming the body of the nation so long are to be surgically removed. Rather taking effective steps to attract foreign investment or scaling up the industrial production and exports and eradicating the pilferage of utilities, the previous regimes kept borrowing money and churning out false figures delude the nation.
The present government has shown the will and courage to restructure the economy which will bring short term hardships to the people. It becomes imperative for the political leaders across the aisle to take the country out of this economic morass rather than doing politics on this challenge. The public sector enterprises incurring huge losses should either be closed giving a golden shake to the employees as the National Shipping Corporation did it in the past or privatized wherever feasible on terms and conditions that may protect the rights of their workforce. The option of public and private partnership in running a few of these PSEs profitably may be explored on the pattern of the Sindh Engro Coal Mining Company in Sindh.
To cut down the huge budget deficit, the government should drastically curtail non-governmental and wasteful expenditures. Though it will impact ordinary people, we should also bring down subsidies to the enterprises of public utility importance. We go for aggressive marketing like China and South Korea for the increase of exports. It will make a difference if the government extends support to selected and targeted exporters. The agriculture vies with the Services sector in substantially contributing to the GDP. Tourism has emerged as the effective foreign exchange earning industry in many developed countries. These sectors should be prioritized for governmental support. The tax-to-GDP ratio needs to be increased from the current 11% to 17%.
All these corrective measures will yield no dividends if the government makes any compromise on bringing to book all the culprits who have been picking up on the precious resources of this nation at every level. All forms of corruption and corrupt practices should be curbed ruthlessly. The people should be kept informed. They outweigh political leaders and self-centered elite in patriotic spirit and endurance of hardships for collective good.