KARACHI: “Think of me as a weatherman bringing you the forecast for bad weather conditions. There is a big storm ahead. It’s time to sound the alarm. You need to run and take cover,” said renowned economist and former adviser to the chief ministers of Sindh and Balochistan Dr Kaiser Bengali ahead of his talk on ‘Economy on a roller coaster — and stuck in the mud’, at the Karachi Press Club on Wednesday.

“I have collected data for the last 25 years, from 1990 to 2015 to study the long-term performance of our governments during these years and the findings that I have come up with are alarming,” he said.

He pointed out that it was not that much a cash-flow issue; in fact the country’s commodities and industry were seeing decay.

Hydel power, supporting local industry and railways, cutting imports and non-combat defence expenditure suggested

“What is our economy running on if agriculture and industry are going down?” He asked. “The stock market, the property market and goods markets in Pakistan are all running on chance. It is like living a gamble. It is a casino economy here. You go to the SITE Industrial Area and find there more offices than factories. Thus our exports are falling. Then when there is no industry, there are no new jobs being created,” he explained.

“It is a dangerous situation also for Pakistan’s defence because you don’t win wars by flexing muscles. Your heavy combat machinery runs on petrol and diesel and to buy fuel you need dollars, and those dollars you get through trade,” he pointed out, while reminding that these days when one goes to a supermarket one really has to look hard to find local goods.

“Even pet food here is imported along with common fruits such as apples, etc. What will you export when you import everything and don’t produce much?” He asked.

“Even our drinking water is packaged by foreign companies, which sell us back our own water in their nice bottles,” he said.

“Pakistan’s economy has seen similar crises before when the dollar prices were going up with little reserves here but nothing as bad as what is now staring us in the face,” he said.

“We went to the International Monetary Fund [IMF] earlier too but [it] didn’t resolve the reason for the economic crisis then. And it is clear that we cannot avoid the IMF again now, so we also have to agree to its conditions.

“Technically, Pakistan is already in default, given that there emerges a net negative balance if the foreign loans that Pakistan owes to foreign interests are deducted from the foreign exchange reserves,” Dr Bengali explained, adding that this time the default could be avoided only by compromising some of country’s political sovereignty.

Dr Bengali shared a 12-point economic revitalisation programme, which includes banning all non-essential consumer goods, shifting the basis of electricity generation from imported fuels to hydel, domestic coal or off-grid solar power and rehabilitating railways and shifting the bulk of inter-city goods transportation from road to rail.

He also suggested amending the foreign direct investment policy to encourage investment that could earn export value greater than profit remittance along with reducing the goods tax rate to five per cent to promote manufacturing, strengthening capital gains tax measures in capital markets to discourage short-term speculative trading.

“Introduce the principle of ‘right of first purchase’ in land and property transactions, introduce the principle of ‘right of first purchase’ in imports, revive Pakistan Industrial Development Corporation’s role in setting up industries in PPP mode, fix retail gasoline price at $150 equivalent to conserve consumption and imports and to compensate for short-term revenue loss on account of GST [goods] rate,” he suggested, while adding that there was also a need for reducing current expenditure, including non-combat defence expenditure.

The economist also pointed out some “bogus” ministries such as the ministry of national harmony, ministry of national heritage and integration, ministry of regulation and services, ministry of climate change, etc, while suggesting that divisions such as defence production be merged with defence, information technology and telecommunications and postal services be merged with communications and revenue and statistics be merged with finance.

Finally, he suggested implementing a 10-year federally-funded scheme to develop two impacts. “One, it will boost employment in a variety of sectors across the country and two, the increased household income will expand consumer demand and revitalise domestic industry,” he said.

Published in Dawn, January 17th, 2019