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Daily Times Editorial 29 May 2020

Some financial concerns


The end of the fiscal year often makes for some somber news reading. We are, after all, in the habit of missing all important targets. In fact, one would be hard pressed to find even one year, at least recently, when the country met some important growth or revenue targets. But this year is going to be much worse, and for pretty understandable reasons. It turns out that the coronavirus and the lockdown squeezed so much out of the economy that this fiscal year is expected to end, about a month from now, with a contraction of about 0.4 per cent, as opposed to a 3.3pc growth target. Estimates of some international financial institutions are even lower, some even going all the way down to negative two per cent, which if true could well be too much for an economy like Pakistan’s to claw its way out of.
Yet it’s not just the pandemic that has upset the economy. The government had the IMF bailout program going for it, but other than that the economy was all over the place. If anything, the pandemic has given it something to brush the uninspiring performance of the first half under. Then, when the pandemic came, the government did try to put its best foot forward and keep enough liquidity in the economy to keep it from collapsing completely. But there’s only so much money that Pakistan can come up with on an emergency basis, at least until international creditors write off some of our debt. Therefore we’ve struggled in all ways possible. We’ve just been lucky that the coronavirus has not spread quite as rapidly here so far as in some other countries, otherwise the economy would have taken an even harder hit.
The next year’s budget making process must have been quite different. The finance ministry would have found itself stuck between facilitating the working class while still doing what it can about raising tax revenue. The government must earn from somewhere. With exports crashing all over the world, because of epic demand and therefore trade destruction, and remittances also dropping, because of record job losses in the US and Gulf region, tax revenue just cannot be allowed to recede too much. Both fiscal and monetary authorities, therefore, will have to come up with innovative programs to create more jobs and hence more tax earning. Remember Pakistan is not alone in facing such problems and the whole world has entered a pretty steep recession. In this environment small steps will matter, but they will have to work.


Debilitating locust attack


Just as feared, clouds of locusts have been destroying food crops across the country, especially in a number of districts in Sindh, Punjab and Balochistan. According to news reports, crops have been attacked in Multan, Muzaffargarh, Vehari, Rahim Yar Khan, Bahawalnagar and Bahawalpur in Punjab and Sanghar, Matiari and Ghotki in Sindh. How all this has left farmers, who did what they could and even beat drums to scare away the pests, hardly needs any elaboration. The National Disaster Management Authority (NDMA) has established a helpline and assured everybody that the country has enough pesticides to keep the attacks in check. But this only begs the question: why weren’t these resources used when the locusts were breeding in broad daylight and a lot of concern was raised, this space being no exception, about the imminent threat to crops?
The government will not be able to brush aside the criticism coming from the Sindh government very easily. Chief Minister Murad Ali Shah wrote to the federal government for help to meet the threat as far back as March. He requested, among other things, a few aircraft to spray some of the more sensitive locations before the problem got out of hand. Sadly, the federal government did not even reply. Now everybody is running from pillar to post wondering what to do about likely food shortage ahead. Let’s not forget that these are extraordinary times, and the coronavirus and everything it has brought has already brought the economy to its knees. The World Health Organisation (WHO) only recently warned of pressure on food production and even the likelihood of famines going forward.
As such, at this time, it was all the more important to protect agricultural production. For some reason relevant authorities sat back when the threat was building and only now have decided to take preventive measures. Yet now it might already be too late. For countries meeting their food requirements will become an entirely different ballgame until the pandemic goes away. Most capitals have already forbidden food export considering warnings just like the WHO’s. That would mean that countries with a natural comparative advantage in agriculture production would stand better than others. Pakistan, being an agri-economy, clearly needs to do more to protect its own natural endowment. The way this particular phenomenon of locust attacks has been handled has left a lot to be desired. The government clearly did not act in time. Now it will somehow have to make up for the lost produce as well as lost earnings for farmers.
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