THIS refers to the report ‘Shoot-on-sight orders amid further unrest in Sri Lanka’ (May 11). The Lankan economy is bleeding. The people are out in the streets. Shortage of food, petroleum, electricity is rampant, and so is street violence. One hopes we may be able to steer clear of that path, but Pakistan and Sri Lanka do share the same set of problems; trade deficit, fiscal deficit and debt trap. Both are looking towards the International Monetary Fund (IMF), China and other countries to come to their aid.
Low tax revenues, heavy borrowings, and high imports are perfect recipe for disaster. Both the countries are treading the same disastrous path. Political turmoil, economic mismanagement and absence of a strong and long-term fiscal policy are reasons for their respective disastrous situations.
Sri Lanka ignored two basic things — exports and agriculture. It failed to produce tradeable goods and it wreaked havoc with its agriculture crops through putting ban on the import of fertiliser. Pakistan has the same trajectory. It has failed to be self-reliant in manufacturing and agriculture sectors. It spends more than it earns. It imports more than it exports.
Pakistan needs a strong fiscal policy which is not sacrificed at the altar of political expediency. The politicians fail to understand that their myopic policies for petty gains are putting the state at stake. Egos and self-interests weigh heavier than the lives of millions. Constitutional gymnastics, uncalled-for sloganeering, claims of ‘international conspiracy’ and repeated calls for third-party intervention clearly reflect the apathy of the ruling elite to the misery of the people and economic meltdown of the state.
The problem with political elite of the country is that when elections are near, they make populist decisions to win votes, and when elections are over, they offer benefits to the business class by giving it tax concessions.
The current government is handcuffed and faces a Catch-22 situation. It is between the devil and the deep blue sea. If it increases petrol and electricity prices, it will risk losing elections, and if it does not increase prices, it will put at risk the economy of the country.
The more time it takes in controlling unsustainable subsidies on petroleum, the less are the chances for the economy to wriggle out of its tight spot. A government standing so close to the next elections will not have the strength to make strong fiscal decisions. As such, a fresh mandate is the call of the day. Only a government that can afford a long-term view can muster the strength to address the thorny issues of twin deficits.
Pakistan needs a strong government which can promote agriculture, broaden the tax base, invest in export-oriented industrialisation, curtail luxury consumption of imports across the board, and reduce our dependence on petrol by finding other alternative sources of energy Let us all keep our fingers crossed.
Ali Hassan Lashari
Published in Dawn, May 15th, 2022