ESCAP Survey 2016

ESCAP Survey 2016

Dr. Jassim Taqui

While Pakistan is facing a grim situation due to the Panama leaks, the United Nations, in collaboration with NUST University offered good news for the economy of Pakistan.

Chairing a seminar organized jointly by NUST Business School and United Nations, the UN Resident Coordinator and Humanitarian Coordinator, Neil Buhne launched the ESCAP Survey 2016 and highlighted the main features of the survey.

A video message by Dr. Shamshad Akhtar, the Under Secretary General of the UN and Executive Secretary of the UNESCAP detailed the survey. She was assisted by Dr. Mohammad Husain Malik, former Chief of Macroeconomic and Policy Section, UNESCAP who spoke for 20 minutes on the salient features of the survey.

The survey reveals that the economic growth in Pakistan increased slightly to 4.2% in 2015 compared to 4% in 2014. Consumption continues to anchor the economy amidst a decade-low inflation rate of 4.6% in 2015 that enabled a significant easing of monetary policy.

Despite lower borrowing costs, subdued private investment conditions have kept overall investment stagnant at about 15% of GDP for the whole year. Trade deficit widened in 2015 as exports declined, mainly due to lower cotton prices. 

Nonetheless, favorable workers’ remittances helped narrow the current account deficit and foreign exchange reserves rose to an all-time high of $20.8 billion at the end of 2015.

Growth is expected to increase further in the near-term to 4.5% in 2016 and to 4.8% in 2017 on the back of continued policy reform efforts including privatization of loss making State-owned enterprises.

Downside risk includes slower growth of workers’ remittances as economies in the Middle East, the major destination of Pakistani migrant workers’, continue to face lower oil revenue and subdued economic activity.

Despite a more favorable economic outlook, Pakistan continues to face significant vulnerabilities from domestic security issues, critical energy shortages and domestic financing of public debt which constrains private sector development. This less enabling macroeconomic environment has resulted in a sluggish inflow of FDI.

Pakistan’s energy demand is expected to exceed domestic supply in the medium term as a result of low investment,  distribution challenges and circular debt flow problems among energy companies. The sector uses only 70% of installed capacity, a situation that leads to blackouts lasting from 6 to 8 hours a day throughout the country.

To address energy shortages, the government introduced new surcharges on power tariffs and inaugurated a solar park in 2015. 

Pakistan will also benefit from energy transmission from Central Asian countries under CASA-1000 project going on-steam shortly. The China-Pakistan economic corridor is likely to add 10 Gigawatts of water capacity by 2018.

One feels extremely disappointed with the fact that the seminar and the organizers opted to ignore the Panama leaks and it’s implication on the state of economy on Pakistan. Nobody talked about transparency and accountability of corrupt politicians virtually belonging to all political parties in Pakistan even as the main economic turmoil being faced in the country is their creation.

Lack of good governance combined with corruption has created immense problems for Pakistan and its decision makers.  People across the board feel cheated and humiliated by their elected government and the elected parliament.

The ruling elite have opted to defend themselves rather than take remedial steps to address a situation which brings shame to the people of Pakistan.

It is noted that western vested interests have waged a campaign against the people of Pakistan claiming that only 2% of the population pay their taxes. The fact of the matter is completely opposite. It is the poor people of Pakistan who are paying taxes.

Meanwhile, the rich elite and decision-makers are twisting the law in their favor so as to evade paying taxes. They are also involved in the theft of electricity and natural gas and are bribing all and sundry to ensure profitability of their enterprises.

According to the Panama leaks, over 200 Pakistanis have amassed a wealth of over $200 billion. If these rich people are taxed at a rate of 70% of their total assets, Pakistan will earn $140 billion which would enable the country to solve all its economic problems. It is painful indeed to see the IMF come up with the suggestion of imposing all sorts of taxes on the common man while they keep mum over the loot and corruption of the ruling elite.

Indeed, there are no words to describe this bizarre policy of the IMF and the economic decision makers of Pakistan.