GOLD has a diversified role in the world we live in. It contributes to the financial stability of individuals and the preservation of national resources. We also know that gold is an enduring expression of love, but while we are familiar with gold’s roles, we are less familiar with how gold may directly impact a country’s economy.
The economic contribution of the gold sector to the global economy is not as widely recognised in Pakistan as it should be. Many countries worldwide rely on gold mining as a key source of revenue, such as China, Australia, Russia, and the United States.
Gold has a significant economic and fiscal impact in all the relevant countries. However, that impact is particularly significant in the developing countries, according to a report by PricewaterhouseCoopers LLP commissioned by the World Gold Council to examine gold’s direct economic and fiscal contribution in the world’s major gold-producing and consuming countries. The findings revealed that the 15 largest gold-producing countries contributed $78 billion to the world GDP.
Pakistan is one of the countries with a vast wealth of natural resources. These resources include coal, natural gas, gemstones, copper, minerals and gold reserves. It is a fantastic move by the federal government to instigate the growth of the most significant and undervalued sector, such as gold.
In the recent past, the prime minister through a tweet announced the decision to carry the financial burden of Reko Diq and its development on behalf of the Balochistan government. However, the question is: will a single tweet be sufficient to transform an entire industry that has been neglected since Pakistan’s birth?
Besides, do the federal and provincial governments have sufficient funds to finance the Reko Diq project? If the answer is in the affirmative, this will be a tremendous initiative by the government, and it will be a game-changer for Pakistan’s economy.
To ensure the success of this project, I believe that not only the federal and provincial governments, but other prestigious institutions, such as the military and the judiciary, and other political parties, will need to collaborate with the government to successfully complete this project for the betterment of the country.
If resource extraction in Balochistan is managed transparently and adequately, it can significantly contribute to economic growth by creating jobs and business possibilities for the local communities.
However, it is essential to remember that the gold mining sector and mine production do not react fast to changes in gold prices. The timescale for project development and mine lifecycle is extremely lengthy; it might take years or even decades to proceed from discovery to commercial production.
On the other side, it is essential to note that gold mining generates direct and indirect employment and brings foreign direct investment, foreign exchange, and tax revenue to Pakistan’s economy.
Hafiz Muhammad Usman Rana
Birmingham, UK
Published in Dawn, March 1st, 2022