Alarm bells ringing for the GoP – Red lines of the economic crisis have been crossed

Government of Pakistan (GoP) must be severely warned that rapid devaluation of the PKR is no panacea for the economic stability. Rather, it is a sure recipe for disaster, which, as a direct side affect, is throwing back more and more Pakistani population, to below the poverty line.

Those economic managers of the country, who think that our economic slide into the abyss, can be controlled with devaluation, re-defining the total public debt, changing the definition of poverty to people who live on 2$ per day income to 1$ per day income and by fudging the economic numbers, are behaving like a pigeon; which closes its eyes, on seeing a cat.

I have been writing in the past that it’s a misnomer and disinformation that Pakistanis don’t pay taxes.

The fact is that all the 220 million Pakistanis pay taxes.

The devil lies in the fact that above 80% indirect taxes and less than 20% direct taxation, is the major cause of our backwardness; and on two dollar per day income basis, is the main reason, of over 130 million population, living below the poverty line.

Moreover, 10% poorest pay 17% of the tax revenue to the government; and richest 10% pay only 10% of the revenue to the government.

Until and unless, these abnormalities of our economic system are corrected, it will be well neigh impossible, to take out major portion of our population (which numbers may well have now increased substantially over 130 million after the recent massive devaluation of PKR) from the below poverty line income segment of population, earning less than two dollars per day.

In this regard, the fastest way to reduce poverty, is to ensure direct foreign investment into Pakistan, for which our foreign missions must be given specific targets.

Other means includes immediate sacking of the entire existing economic team of the SBP and the MoF. And by bringing back the billions of dollars illegal foreign funds and properties of Pakistanis, a la the Saudi Arabian Model and recovery of illegally written off loans and bad debts, by imposing economic emergency laws, on fast track basis.

Last but not the least, immediate launching of a scheme for payment of 3% PA profit (payable bi-annually) on Foreign Currency bank deposits in Pakistan (backed by the sovereign guarantee of the GoP) with a suitable, but attractive fixed period. This is a fool proof scheme, sans any risk, which can boost up our foreign reserves, in very short time, on extremely cheap rates as compared to foreign loans and international bonds, which were sold by the previous government of PMLN, at even 8.25% rates, for which I had then requested to Mian Nawaz Sharif, to hold an inquiry, to fix the responsibility of the culprit(s), who allowed the sale of Euro Bonds, on such a criminally high interest rates.

Syed Nayyar Uddin Ahmad

Sydney