Incentive-ridden policies needed

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In the wake of Pakistan’s dire economic scenario, emergent steps are required by the new government to remove the clouds of uncertainty hovering over the economic horizon to at least stop the further deterioration of the economy which is already dwindling at a faster pace.

The recent political uncertainly brought about by the PTI chief Imran Khan’s undue political rhetoric  by making deliberate efforts to create a constitutional crisis, he has been successful in bringing the economy on the verge of catastrophe. What is more unfortunate is the fact that he is still coming up with renewed versions of conspiracy  theories every day to let the uncertainly prolong and shy away the investors and business community from doing business in the country. However, this does not mean that the coalition government should sit idle and waste time on less important issues. It is their responsibility to come strong on the economic front and introduce immediate workable plans to remove the uncertainty and thwart any bids by the IK who is hell-bent to play further havoc with the country, its institutions and last but not the least, the country’s economy, which is already on the verge of catastrophe.

There seems to be no direction for our economy to proceed in that path and the business community is in a fix as to what lies ahead for them. It is a fact that economic prosperity cannot  materialize without peaceful atmosphere marked by goodwill on part of the government and a set of relaxations and incentives provided to businessmen and investors so that can concentrate on their businesses with peace of mind.

But the same is missing in our country as the political scenario is grim and every day we hear of ‘Tsumani’ Marches and other threats from the PTI chief. However, time has come the government must spring into action. There is no denying that the new regime has inherited the economic woes from the previous government in the form of sky-rocketing price inflation, falling foreign currency reserves, ever-widening fiscal deficit, and an unprecedented current account deficit and free-fall of Pak rupee against US dollar as also the persisting food shortage due to inept agriculture policies. The inflation-hit masses are looking for a relief from the government and they are not ready to hear any excuses from the current government as they had enough of such stuff from the previous government, whose main job was to gain time by making unrealistic promises and taking frequent U-Turns on its promise. Though it is a formidable challenge to turn around the economic scenario but at least steps in this direction are required to set the set the stage for revival in the long run.

The new set-up needs not cry over spilt milk and refrain from adding twist or exaggerating the situation by issuing presser regarding the fiscal and current account deficits. Rather they should focus on what remedy they have to rectify the situation. The nation has become fed up with political rhetoric regarding disappointing  facts and figures. And they only want action. Whatever the IK did is before the nation and the new set-up instead of harping the notes of IK failures should focus on their own remedies which they have in store for the economic revival. There a number of hurdles for the new set-up.

IMF decision to delay the $1bn tranche is also another twist to the situation. Moreover, reports suggest that our time-tested friend China is also playing dilly-dally with the roll-over of its debt programme of  around $2.5bn due to the political uncertainty in Pakistan. China’s investment in the CPEC projects and its other debt programmes have in the past played a big role in rising  our dwindling reserves but for the time being they seem to be following the wait-n-see policy due to political uncertainty in the country. Economic gurus say that the government has to come up with quick fixes and also long-term remedies to set the country on revival of economic prosperity in a sustained manner.

Some financial experts have also suggested privatization of state-owned enterprises as in the past it has been noticed that by doing so, not only the performance of these enterprises improved but the over-staff and political appointments in these enterprises were minimized. Another big challenge is to stop the capital markets from a steep fall which is in process since February this year after a political turmoil and constitutional crisis occurred in the country and the prolonged political disturbance existing in the form of dissolving the NA and also due to lack of clarity in policies later on. Right now the capital markets are not moving ahead, rather they are following a one step further, three steps back policies as they wait for the government’s clear-cut policies and are in no hurry to make losses.

However, due to this approach by the capital market, the economy is further suffering. So what is needed is that government should come up with clarity regarding what it has in store for  fixing and remedying the economic woes of the country. As an emergent step to win the confidence of the capital market people, the government must restore the Extended Fund Facility (EFF), but that is not an easy job and it requires a lot of commitment and hard work by the government’s economic team. There are only two months left to the introduction of new budget and that too must be incentive ridden as people are not ready for anything that can trigger further inflation or price hike which is still unprecedented in nature.