The multiple crises and challenges

Editorial May, 13 2024
The multiple crises and challenges
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Pakistan's economy, which is facing extremely difficult conditions, has been the center of attention of international financial institutions and analytical reports are being released from time to time. 

The volume of loans taken at the international level has exceeded 64 thousand billion rupees.  On the other hand, the state bank has safe foreign exchange reserves at the level of 9 billion dollars, while according to estimates, 22 billion dollars are required annually to pay external debts and there are basic needs like energy, food, salaries of government employees and health and education besides the external debt at loacl level. 

The size of the national income is very small compared to them and these requirements are one of the reasons for the external debt. Last month, Pakistan completed a three-billion-dollar short-term loan program with the IMF, which helped prevent a default, but due to the realities on the ground, Pakistan has agreed to a new package of $6-8 billion for the time being. An IMF mission is likely to visit the country this month.  Ahead of talks with the government, it has issued a report warning of the risks to the economy due to political uncertainty.  Among them, the timely completion of loan repayment is the biggest challenge. The government machinery under the leadership of Federal Finance Minister Muhammad Aurangzeb is preparing the budget for the next fiscal year, keeping in mind various angles including this report of the IMF. 

Reforms in FBR are in progress. Economists are rightly urging the government to curb unnecessary spending, including scrapping incentives. Surely the future budget should be based on such measures. The privatisation process is also on the anvil.  In the meeting presided over by Deputy Prime Minister and Chairman of the Cabinet Committee on Privatization, Ishaq Dar, approval has been given in principle to include 24 more national institutions in the privatization program. In the meeting, the handing over of 40 more institutions to the private sector under the five-year program was reviewed.  Privatization of loss-making departments was declared as the first priority. Remember that various ministries have already declared more than 60 institutions of national importance.  Ishaq Dar directed the relevant authorities to re-determine their status. According to the decisions taken in the meeting, the top priorities are PIA, First Women Bank, House Building Finance Corporation, electricity distribution companies include LESCO, PESCO, CEPCO, ISCO, MAPCO, JEPCO and HESCO, State Life Insurance, Sindh Engineering and Pakistan Reinsurance Corporation are already part of the privatization list.

 The meeting also considered the transfer of more than 32 crore shares of OGDC to the Ministry of Energy. It should be clear that the government's privatization program includes those government institutions that are found to be mismanged or they do not have the power to compete, but have become a burden on the government and continue to pay their employees by taking funds from the public treasury.  At the rate at which the country's population is increasing, new investment or expansion of institutions in many sectors is necessary.  But the increasing negative trends and inattention have paralyzed this thinking and practical steps. The culture of competition is growing in the world, which has become mandatory to promote in Pakistan and now the national institutions are running at a loss.  It has happened, but the increasing negative trends and inattention have paralyzed this thinking and practical steps.

The culture of competition is growing in the world, which has become mandatory to promote in Pakistan and there is no longer any concept of running national institutions at a loss. Until few years ago, the profitable state-owned commercial enterprises cultivated the economy and the national treasury. Unfortunately, those institutions of Pakistan, which once provided revenue, are now a burden on the economy and have huge short-term loans to pay employees.  The Privatization Commission Board has planned to give 6 more national institutions to the private sector in its 5-year plan. 15 institutions are already in the fall list, including 6 out of the total 21 will be privatized immediately.  Life Insurance, Agricultural Development Bank, Utility Stores Corporation, Jamshoro, Lakhra and Hazara Electrical Power Company are included.  

The economy has grown and the annual volume is in trillions and these huge amounts that should go to the national treasury are wasted.  The process of privatization of national institutions which has been going on for more or less 3 decades, there are examples of sales to the private sector being successful and providing revenue to the economy, but there are also some downsides, including fears of unemployment at the top of the workforce, but the loss of skilled workers in commercial enterprises, there is no concept of unemployment. However, thorough homework should be done before starting the privatization process. Meanwhile, tax reforms are also necessary.

Since last year we have been hearing that a new reform program is being started in FBR with the support of World Bank and other international institutions.  The finance minister of the caretaker government has left a map which is probably being prepared for implementation.  It is important that this time we learn from our past. Despite all its flaws, our civil service plays a key role in state organization. The weakness of the civil service is not commendable. 

The upheaval that has taken place in the FBR in recent times has not been understood to be linked to any reform process.  It is also said that the intelligence reports were fabricated and the lists were made elsewhere. 

NC Desk
NC Desk https://www.dailynationalcourier.com/author/nc-desk
Daily National Courier is a leading morning English newspaper of twelve pages covering all international and national political developments on 24/7 basis.

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