HYDERABAD, March 19: Eminent economist Qaiser Bengali has predicted economic crisis next year and rejected government claim that the country’s foreign exchange reserves have improved.

He said the foreign exchange was in fact borrowed money that would be cleared by future government.

He was delivering a lecture on “Pakistan's political economy: present situation and future prospects” at a local hotel on Monday. The event was organised by Sindh People’s Party Parliamentarians study circle.

Defining economic development as growth of economic and human assets, Mr Bengali presented a gloomy picture of the country's economy and rejected government figures on much talked about trickle down effects.

He said over the past 25 years, no new industrial unit was established in the country. Now 300 people worked in a factory where 3,000 worked in the past because of over-dependence on automatic machinery which had increased production and profit but reduced number of jobs, he added.

He said over-reliance on automatic machinery would certainly increase GNP but it would lessen employment opportunities and this tendency was flourishing in the country. He said it was every important to examine whether GNP was increasing on the basis of profit or wages.

He said three years back growth rate in GNP was six to eight per cent but in banking sector it stood at 25 per cent as the banks were dependent on profit earnings. He said increase in banking business never created jobs.

He was critical of government policies of allowing banks' financing policies and said the government showed growth in a few sectors to claim that GNP had increased but in case credit policies were changed or there was economic crisis, such growth would stand exposed as it was not lasting.

He rapped privatisation of the PTCL, Habib Bank, National Refinery and Pakistan State Oil and said this sort of privatisation would reduce number of jobs.

He dismissed the claim that Zulfikar Ali Bhutto's policy of nationalisation had affected the country's economy and said nationalisation shifted economic activity to public sector from private sector.

He referred to McDonald-like investment in the country, saying from it the country did not get even one per cent of the profit as it was sent abroad. “It will increase our foreign exchange deficit and will create a crisis by next year”, he predicted.

He criticised the government's growth strategy, saying poverty had increased and jobs were not being created.

Speaking about economic disparities in Pakistan, Mr Bengali said the country was divided into two classes i.e. elite and poor. He said there were people who received Rs1 million salary package whereas the poor could not have two squares meal a day.

He said unevenness in the society created disorder and unrest, and urged the people to launch struggle for restoration of democracy, saying it was a sine qua non for economic stability.

Speaking on the occasion, PPP MNA Naveed Qamar Zaman Shah said defence expenditures, which remained unaccounted so far, would have to be critically and transparently examined.