Fiscal discipline can mend arousing crises in Pakistan

Endless electricity outages and other crises stemming in Pakistan. The country is passing through a terrible phase that has been created by inadequate governance. There seems to be an endless energy crisis along with the agricultural, industrial and economic sectors being at a disastrous stage.

During the past few days, PML-N has been protesting against loadshedding on the streets of Punjab. PPP has accused the PML N of triggering these riots. The truth is the IPPs haven’t received payment, Pepco cannot pay for fuel, dams are short of water and Chashma has broken down as a result of which electricity is short 8000 megawatts.  Anyone can guess what the impact will be on the country’s economy.  It will bear a loss of some 3 or 4% of GDP as a result of power shortages.

The people have had enough and have now become hostile – they are not willing to tolerate these difficulties anymore and that is why they are demonstrating out on the streets.  Political parties always join in and support movements that the people favour.  PML-N did the same during the lawyer’s movement.

The Asian Development Bank has warned Pakistan regarding fiscal discipline stating that it will monitor the progress otherwise it will seize its loan program in the country. 

Ever since Government decided to privatize WAPDA twenty years ago, no new power generation capacity has been added in the public sector nor any existing capacity upgraded. There are two 900 megawatt power plants of Pepco at Chichoki Maliyan and Nandi Pur which have not been commissioned for last 2 years because of some interministerial disputes.

With respect to Thar Coal, we said for years the coal there was inferior. Now, the world has introduced new technologies and many large companies are willing to finance the project. In 2007, the provincial laws were changed, one of the best companies in the world was called upon and a contract was signed. The company had to pay an amount to the Sindh government in order to proceed .

Three years have passed by and no one wants to receive that payment, as a result of which no work has started. Only two LOI’s have been issued in the past three and a half years where there’s potential of 15,000 megawatts, plus natural gas potable water, and synthetic diesel.  But nothing has been done so far.

I certainly predict that the fiscal deficit this year will be the same as it was last year i.e. Rs. 1300 billion. The bottom line is that the government in the last three and a half years has doubled the loans. They increased from Rs. 6 Trillion to Rs. 12 Trillion. Increase of Rs. 2500 billion is because of currency devaluation, Rs. 1500 billion have perhaps been spent on development. I want to know where Rs. 2500 billion has disappeared. We spent it on current expenditure. The economic growth of the country is 2.5% which I consider as a zero percent growth – it should be around 8, 9 percent.

The government plays no role in the agricultural sector because it is controlled by mother nature. Everything happens on its own there. The industrial sector is in a terrible condition, there is no energy, gas, nothing which is why I don’t understand how they industry is surviving in Pakistan.

The solution to all of this is to look forward to a new election and before the situation of the country gets worse, the political parties should go for a fresh mandate. And whoever comes into governance with the confidence of the people should stabilize the country and remove all the hindrances. All Pakistan requires is fiscal discipline not IMF programs.

I repeat that the country’s problem does not lie with its people – they are very resilient and can bounce back quickly – it’s the troubled leadership.  In my opinion, a new leadership should be given a chance to eliminate our problems.

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