The situation of street crimes in Karachi is better than Washington and Paris, Sindh Senior Minister Sharjeel Inam Memon boasted last week. Quoting updates from the International Crime Index, he said at a presser that Karachi ranked 78th out of 333 cities in various countries, according to a Dawn report.

Had the staff of the learned minister looked at the right page of Numbeo.Com (the one that displays current ratings), he would have been more pleasantly surprised to know that Karachi, in fact, ranks 82nd out of 345 cities in various countries. (The minister’s staff apparently gleaned information from the page that displayed historical indices). But that’s beside the point.

Now, let’s revisit Numbeo.com and look at the current ratings. There, we find that Rawalpindi, Lahore and Islamabad have far better rankings — 131st, 235th and 270th, respectively. Businessmen in Karachi must grow wiser now and move their businesses to these three cities.

This is a classic example of how government officials downplay the existence of a serious problem. The law and order situation in Karachi is a perennial problem that, along with poor road and transport infrastructure and lack of proper water and sanitation systems, continues to block fresh local and foreign investment in the city — Pakistan’s commercial and industrial hub.

Authorities, quick to celebrate hollow victories, must wake up and deal with the realities of current law, order, governance, and economic situation to improve

One hopes that the Special Investment Facilitation Council (SIFC), jointly run by the civil and military leadership, will show more seriousness than our learned provincial minister in helping Sindh improve Karachi’s law and order situation. This has become imperative as the SIFC has now started making big achievements in attracting foreign investment — at least in terms of initial pledges.

During the visit of Saudi Foreign Minister Prince Faisal Bin Farhan Al-Saud to Pakistan last week, Pakistan pitched 25 projects with an estimated potential foreign investment of $32 billion to the high-powered Saudi delegation. There is a fair chance that Saudi Arabia will agree to pour billions of dollars into at least some of the identified projects in the mining, energy, and agriculture sectors, as well as in computer chip manufacturing and railways and water dam construction.

Pakistan’s economy is projected to grow this fiscal year at two per cent at best, according to the International Monetary Fund (IMF), and the unemployment rate is expected to remain 8pc. Even in the next year starting from July the GDP, growth has been forecast at 3.5pc with unemployment rate as high as 7.5pc.

Under these circumstances, quick and massive inflows of foreign investment are a must for a country that has been struggling to manage its balance of payments (BoP) as both the stocks of external debts and their servicing costs grow, plunging the country deeper into a debt trap.

Exports and remittances have started rising, but together, they are just enough to finance the overall deficit in merchandise and services trade. This means the country must arrange foreign exchange from other sources for external debt servicing.

Finance Minister Muhammad Aurangzeb presented a strong case for Pakistan’s needs and eligibility for a long-term IMF loan before the Fund during his recent visit to Washington. The current $3bn short-term loan will expire this month after the release of the last tranche of $1.1bn.

The security situation in the Middle East after Iran’s first-ever direct attack on Israel in retaliation for the April 1 attack on its Consulate in Damascus, Israel, is no less than explosive. The region may soon find itself engulfed in a wider, multi-frontal military conflict if a full-scale war between Tehran and Tel Aviv breaks out.

One can imagine its negative fallouts on global trade and investment. For a country like Pakistan facing an acute shortage of foreign exchange, seeking BoP support from the IMF and additional development funding from the World Bank may become more challenging and perhaps unofficially tied to its position in the hourly-unfolding Iran-Israel conflict.

It is time for our federal and provincial governments to accept disturbing facts about law, order and governance as they are and work harder to address them as efficiently as possible. It is time for them to win the hearts of the business community and overseas Pakistanis to ensure that the growth momentum seen recently in exports and remittances is not lost. Over nine months of this fiscal year, goods’ exports grew about 9pc to $22.9bn, and remittances increased by about 1pc to $21bn.

It is heartening to note that the stage is being set for attracting huge foreign investment from Saudi Arabia and other Gulf Cooperation Council countries, as well as from China and the US. The government and SIFC deserve due credit for this.

However, it is equally important to address the genuine grievances of the local business community to whatever extent it is possible rather than telling them that the street crime situation in Karachi is better than in Paris and Washington. It’s always unfair to match apples with oranges, isn’t it? And it is outright naive to downplay a serious problem by quoting data from crowd-sourced online databases like Numbeo.com.

Pakistan’s fiscal position is so tight that meeting the demands of local businessmen regarding subsidies and financial support is just too difficult. During 9MFY24, between July 1, 2023, and March 29, 2024, the federal government’s bank borrowings for budgetary support (on a cash basis) swelled to Rs3.6 trillion from only Rs1.9tr in the same period last year.

This happened even though the Federal Board of Revenue not only met its July-March FY24 revenue collection target of Rs6.7tr but rather surpassed it by a few billion.

Published in Dawn, The Business and Finance Weekly, April 22nd, 2024

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