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Poverty, inflation and corruption rules the roost, still
July 08, 2011
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When PM Yousaf Raza Gilani took oath as the Prime Minister of Pakistan on 25th March 2008, the poverty line was 471 million, which comes to about 28.4% of total population. Within a spate of three years this has risen to 72.9 million, which stands at 41.2%. This means that an average of 25000 kept on falling below poverty line every day. According to the federal bureau of statistics (FBS), during past three years, there has been an increase of 152% in sugar prices, 88% in meat prices, 86% in milk prices, 122% in prices of dal maash, and 46% in wheat prices. During 2008-9 the food inflation was 26.6%, which arose to 57% in 2011. CPI (Consumer price index) rose by 100%, while electricity tariff is being raised nearly every month; raising it by 130% to date. A 200% astronomical raise in price of LPG has stunned the already squeezed masses. Thousands of suicides are being committed every month, but despite of all these alarming suicidal trends, gas has been increased by 15% for household consumers and 20% for commercial consumers. LPG has been raised for fifth time in a month now, while annual corruption ratio stands at Rs.600 billion-1000 billion.
FBR receives annual tax revenue of Rs. 1580 billion, out of which Rs1000 billion is siphoned off. Only stemming this theft of Rs1000 billion is sufficient to rid of any international debts, including IMF (International Monetary Fund). Meanwhile the seed of destruction of agricultural landscape of Pakistan is but ready to blast off, as it has already been sown in form of taxes and duties on tractors, seedlings, agro-machinery, fertilizers, pesticides; increasing productivity rates by Rs.1000 per 4-acres. The current budgetary deficit stands at Rs.975 billion, which would be plugged by Rs.287 billion worth of foreign debts, while the remaining would be managed through domestic loans! Trade deficit stands at U$.14 billion. Rs.790 billion have been earmarked for payment of loans and debt servicing, while State Bank is quadrupling the printing of currency notes, robotically in order to cater for maintaining its royal spendthrift tendencies, the inflation skyrockets at a leisurely pace.
The incumbents have broken all previous historical records of beggary of loans, as Pakistan stands swathed in massive debts worth U$.58.50 billion; combine this with massive burgeoning inflation, and all the tall claims (which were not necessary to be bothered about, anyway) are /have been gleefully exposed as nothing short of macabre joke and cold-bloodied ranting by the government. Government seems to be clamoring for more loans in order to repay earlier loans! During the ending of past regime of Mian Nawaz Sharif, there were U$.37.40 billion worth of foreign loans which were inflated to U$.40.50 billion in Musharraf’s regime: but the current voluminous U$.58.50 billion, right in the tenure of an elected, ‘masses’ government’ is beyond anybody’s comprehension.
In its third term report, issued on 04th of July, State Bank has expressed its similar apprehensions about this loan addiction of government; stating that it was very imperative to strictly regulate this rampant addiction of government to loans, in order to reign in galloping inflation and maintain/ streamline an economic discipline by the government. These notions and benchmarks have strengthened considerably in current prevailing scenario. Inflation remains at 13%, a sore point despite being affordable in view of consumer index. The main reason for this has been cited as heavy State Bank borrowings by government, massive and steady non-stop increase in petroleum products, commodities, etc. The report also exposes the inability of government to control /minimize these revenue deficit/ official expenditures, with chief reasons being political expediencies.
State Bank has also said that this trend of rampant increase of revenue deficit is quite evident in piling foreign debts. The payable loan amount by government stand at Rs.5, 594 billion (about 31.8%) of GDP; and which is even more than twice the amount during last days of Jun2007, and is raising alarming concerns. Taking stock review of foreign debts would bring forth the alarming perspective of government having to pay at least one rollover worth Rs.2854 billion. While in order to cater for any other loan requirements, this rollover can be further increased, endangering rate of interest. While in order to keep the financial system serviceable, the financial deficit would have to be kept constrained below 4.5% of GDP till 2012, by such prudent enforcements like increasing tax net, better maintenance of financial records, ending non-targeted subsidies, and cessation of extra -financial activities/polices/steps. Alongwith a constant and steady flow of loans, in order to enhance National loans’ ratio, besides lessening any dangers of increase of rate, and any possible rollovers.
However the obduracy of incumbents despite repeated warnings and sufficient briefings over the looming concerns, apprehensions and lurking dangers, is enough to expose the tall claims, and irresponsible behavior of government in heeding to such prudent advice and warnings. The only plausible reply one gets is the regular obdurate rote of the ‘fact’ that ‘loans are necessary for economy’, which can easily be translated into one ridiculous stance, since a Country with massive overload of U$.59.50 billion can hardly take an economic refresher.
With things deteriorating to obnoxious levels, even the international lenders like IMF, World Bank are left with only guarantees of lending over such anti-masses steps like increasing commodities’ pricing, electricity and gas tariff and increasing petroleum prices, all of which are inflicting their heavy toll on masses.
So much that it seeks as if only a miracle can only salvage Pakistan from this mess.
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