Passing through one of the heaviest economic crises of its history, the Pakistani government led by recently elected Nawaz Sharif has been seeking ways out of the economic downturn, deteriorated by political instability and violence.
One of the most populous countries of Southern Asia with around 180 million people, Pakistan experienced in the early 2000’s a rapid development having promising economic figures. But during the 2000’s, the nightmare began for the Pakistani economy as the country lost its competitive advantage in agriculture and textiles which constituted the main export goods of the country. Until 2007, Pakistan annually exported textile products worth $12 billion and benefited from $19 billion in agricultural exports.
However, the global crisis and the destructive effects of the 9/11 attacks caused Pakistan to lose the main source of export revenue which decreased from $45 billion to $18 billion. With the energy crisis which started in 2009, many industrial companies and textile firms had to suspend their production. The flood disaster in 2010 worsened the situation and brought the country on the edge of banktrupcy.
The significant increase in the defense budget aimed at the “combat against terrorism,” in addition to the $45 billion financial loss resulted from the violence which lasted 10 years, are two important factors impinging on the Pakistani drawback.
Political instability and the failure to implement an effective economic policy made the Pakistani economy rely on foreign loans from the World Bank and IMF, exacerbating the situation as the economy growingly depends on foreign borrowing.
Even deputies do not pay taxes
Nawaz Sherif, who was elected prime minister after national elections on May 11, inherited an economic disaster from his predecessor. He is fighting for the Pakistani economy to survive, but he has little chance than to appeal international monetary organizations for further borrowing and extensions of previous loans’ terms. Another major problem is tax evasions. Only 2 percent of the population regularly pay taxes.
Many experts define the increase in borrowings as a fatal mistake and warn Sherif not to rely on foreign loans as the foreign debt reached over $50 billion. They criticize the government because the foreign borrowing provides a relief in the economy for only a short term, but does not help the country to recover in the long run.
Applauding Primi Minister Sherif’s efforts to struggle against corruption and to take measures to surmount the energy crisis, Tarık Perzada underlined the fact that some ministries related to energy and natural resources are known for sporadic bribery. Defining unfair taxation as a major factor for corruption and tax evasion, Prezada noted that “It is shameful that only 2 per cent of the population pay taxes regularly. Yet it is the reality unfortunately. You have to carry all of the responsibility of 180 million on the shoulders of the 5-6 million. Can you imagine half of the national budget comes from foreign aid and loans. This gap grows everyday. When the government is able to build a functioning taxation system this would bring about rapid development. You cannot run the country by collecting taxes only from oil and cell phones. In this country, even deputies do not pay taxes.”
Pakistan to elect president
The High Commission of elections in Pakistan has announced that it is proper to hold the presidential elections on August 6 to determine the next president to replace incumbent President Asef Ali Zerdari whose term will end in September.
After a heavy loss in national elections, Zerdari declared he would not run for candidacy for presidency. According to the election schedule publicized by the Commission, parties should decide on nominees and inform the Commission about their candidates by July 27. A few days later, on August 6 the senate, parliament and provincial councils come together in a closed session to elect Pakistan’s next president. Prime Minister Sherif is expected to nominate Sartaj Azez, a veteran bureaucrat and former minister of economy whose experience in economy and finance would be helpful for Sherif to get out of current crisis.
Source: Kuzey News AgencyLast Mod: 26 Temmuz 2013, 15:30