Tuesday September 06, 2016

 

 CONTENTS

 Home

 News

 Editorial

 Opinion

 A Fauji's Diary

 Story

 Letters

 †-Community/Culture

 P W Policy

 
 
 
 

The Life of Jinnah

 

Deficit Budgets: The Mother of All Economic Ills

The current multiple laired economic devastation in Pakistan is the ultimate result of years of deficit budgets.

 

Consecutive Pakistani governments, legal or illegal, elected or non-elected, military or civilian, made deficit budgets with provisions of borrowing money from internal and external resources.

 

As internal resource, these governments issued various kinds of certificates, treasury notes, bonds or directly borrowed money from banks or simply printed money without required assets to back it. As external source, government functionaries constantly pursued international financial institutions for lending money to meet the budget deficits. Sometimes, these monies were borrowed at such harsh conditions which outbalanced the benefits and these monies consequently became cumbersome burden on Pakistani economy.  

 

Today, Pakistan is completely trapped in debt with no possibility to get out of it. Every year, with deficit budgets, this debt trap is tightening Pakistani economy. So much so, now, Pakistani government has to oblige World Bank, IMF and other international lending financial institutions to take steps contrary to the economic, political and national interests of Pakistan.

 

Prime example, electricity rates; practically, Pakistanís basic energy structure has collapsed. Anyone familiar with fundamentals of economic development knows that without cheap and reliable energy supply there can be no economic development. Constantly humming machines not only play major role in nationís GDP they also provide jobs to workers to keep their family lives financially moving.

 

As a progressive third world country, govt. of Pakistan played a vital role in development of its industrial base. It established many important large scale industries which kept Pakistanís industrial base functioning.  IMF and World Bank constantly pressured Pakistan to privatize many such industries which were either operated directly by the government or by semi autonomous govt. bodies.

 

The idea behind this privatization was to give boast to market economy, engage private sector in industrial production to the max, and minimize govt. control over markets. Apparently it is a fancy idea. It has worked well in developed western countries for last 100 years or so. However, legislative evolution, helped maintain a fair balance in western societies which protected common citizensí rights up to the extent that it also allowed the healthy growth of private industries.

 

Pressuring countries like Pakistan to privatize basic industries like banks, steel, electricity failed those countries economies. Pakistanís broken energy supply sector is the prime example of World Bankís and IMFís such dictated policies.  The ruthlessness of these policies can be understood with World Bankís and IMFís insistence on raising electricity prices. The countryís economy is facing ultimate demise, but the World Bank and IMF are concerned about their interests, whereas govt. of Pakistan is worried about the delivery of the next installment of the loan committed by these institutions. No one is concerned about Pakistanís failing industries, economic downturn, growing unemployment, rising numbers of suicides due to economic hardships and widespread violence in society because of failed economic system.

 

Is anyone serious about fixing Pakistanís economic problems? All ostensible indicators suggest neither govt. of Pakistan nor international financial institutions want Pakistan should come out of the shadows of economic disasters.

 

To us, the first sincere indicator of making Pakistan an economically healthy country is to force govt. of Pakistan to balance its budgets. The army of illiterate parliamentarians, if they are sincere in watching Pakistanís economic interests, should fight tooth and nail for every penny allocated for anything in the budget. First, the govt. should not dare to present deficit budget in the parliament. If govt. presents a budget with deficit, the parliamentarians should make sure govt. does not get away with it. Parliament should declare deficit budgeting a crime against the people and the state. Balanced budgets will discourage govt. from further borrowing. Economic freedom will decrease Pakistanís dependence on international financial institutions which will insure Pakistanís freedom in policy formulation.

 

The way to Pakistanís freedom is based on balanced budgeting. The volume of deficit of budget will determine the level of Pakistanís freedom in its policy formulation including the prices of energy products including electricity.

 

  

Pakistan Weekly - All Rights Reserved

Site Developed and Hosted By Copyworld Inc.