The times are tough and testing, and the life has become difficult for all barring 5% of the elite with perennial sources of ill-gotten wealth. The Government is in a bigger fix than the citizenry. The problems of rising prices and unemployment and the inflation are the real challenges and on top of that there is sometimes motivated, sometimes sincere criticism on the government and everyone, from a man on the street to a celebrated economist, has a package of suggestion to bail the government out of this quagmire. Some say that the Cabinet should be downsized, some target expenses of PM House. Nobody seems to be offering a solution practical enough which could steer Zardar-Gilani government out of this crisis. It has been reported by The News International that renowned economists are of the view that until the government stops borrowing huge amounts of money from the State Bank, the inflation and interest rates can not be brought under control.
Participating in a discussion, ‘IMF Conditions – Future of Pakistan’s Economy’, organized by the Jang Forum, economics expert Dr Akmal Hussain said that the government had borrowed Rs500 billion from the State Bank, triggering inflation and a simultaneous rise in the interest rates of the commercial banks and depleting the country’s overall economic state. He said that the IMF, while following double standards, was trying to promote economic contraction in Pakistan in this time of recession, rather than promoting economic stimulus, like it had done for the western countries at the time of recession. This Bretton Woods sister may be gorgeous but she is ruthlessly hypocrite. Akmal Hussain said that there was a dire need of increase in revenue of the country which could not be achieved by limiting public sector development and contraction of the national economy.
The country had lost one third of its infrastructure in the flood disaster and the situation should be exploited as an economic stimulus to invest in public sector and infrastructure building to generate revenues, create employment and deal with the disaster, all at the same time. He said that the budget deficit should be left as a secondary issue as once economic growth was ensured through injection and production of revenue through economic stimulus, the budget deficit would decrease automatically. He said that the European countries, which were going through a budget deficit of nine percent, were making up through economic growth, whereas, Pakistan had only 6.3 percent of budget deficit.
He said that massive amount, around 18 billion dollars, needed for flood affectivities’ rehabilitation could not be reached without international funding. He stressed the need to ensure an effective financial management system, project management and project transparency to build trust of foreign investor and donors, not just in emergent situations but also in routine operations. He proposed a social protection program featuring an Employment Guarantee Scheme on the basis of ‘cash for work’ for which the flood hit areas reconstruction could play as a vital platform.