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Politician’s Corruption Indulges Macroeconomic Crisis In Pakistan

Recent SBP reports shows progress in overall economy of Pakistan but this progress linked with IMF and other loans. Economic progress and stability with the help of loans could not be sustainable. Such progress is indicator of further deterioration in economy. SBP also discuss the uncertainties of the sustained economic progress. It is important to adopt effective policy measures to tackle with forecasted threats to economy to achieve sustained economic growth. In the last twenty-two months the tight monetary policy chased by various criticisms both by business community and some of economists. Most of circles were of thought that world wide the monetary policy in most of developed countries eased for the sake of investment due to financial crisis but Pakistan was opposite to this practice. Actually the socio-political and macroeconomic scenario of Pakistan is quiet different from developed countries. Continuing political instability, rising social unrest, riots and protests, corruption of civil servants, bureaucrats and politicians all this in combine provide no surety and security to ease monetary policy in high inflation and continues borrowing from central bank.

The dean of NUST Business School, Islamabad criticizes monetary policy in one of his article of daily newspaper of Pakistan “the News”. He says that “SBP should consider and analyze various macroeconomic developments whish are likely to unfold during the remaining period of the current fiscal year”. He discussed various components of current economic situations and criticizes monetary policy in presence of such unstable and uncertain environment. He furthered quote that” no country has ever achieved sustained higher economic growth in the midst of a rising debt service burden”

Hence either the monetary policy tight or easy it remains a point of criticisms and dissatisfaction among the economists, business and investment communities. Monetary policy changing depends on macroeconomic stability of Pakistan and this stability farther linked by various issues. However the rope of all these issues is strictly tied with one hook which is too much corruption of politicians. Various circles criticizing and highlighting the corruption of politicians clearly but unfortunately there is no immediate action. Pakistan is a country which built on the foundations of Islam and luckily it is the only country in the world which achieved on the name of religion Islam. The history of Islam has very transparent, accountable and noble leaders. After the Holy Prophet (P.B.U.H), Hazrat Abu-bakr-Siddique, Hazrat Usman Ghani, Hazrat Umer Farooq and Hazrat Ali all have showed exemplary good governances to all Muslims. There was equality of rights, there was democracy there was concept of open market and investment in their era. There was a proper banking system, judiciary system, and jail system and aid institute at state level to benefit poor in the name of Bait-ul-maal. Nowadays Pakistani Muslims are confused in such a way that they may not have any history to learn from and follow.

In that era of Khulfai-Rashidine Muslims were not symbol of danger whereas they ran the state fully according to Islam. Our leaders are afraid of Islam just because they may catch up in a fully Islamic system. Some of Islamic groups of Pakistan which are called as extremists defame the Islam, in my eyes such people are no more Muslims they may be psychotically sick persons. Taking benefit of these people our politicians show their reluctance towards Islamic system. Whereas by following Islamic system Pakistan could become most beneficial country for investors, security of neighbors and for those who think Pakistan as symbol of threats.

The current constitution of Pakistan is taken as Islamic but my mind could not accept such a law as fully Islamic in which there is spacing for leaders to plunder public money by putting them in extreme poverty and enjoying luxurious life themselves. Even not any other religion either Christianity or others do not allow such constitutional pillage or havoc. This is our constitution which is supporting our corrupt President in addition with various important ministers. By declaring NRO (national reconciliation ordinance) as unlawful about 34 important politicians’ highlighted as extreme corrupt. The sign of being noble is to get resigning immediately by those leaders but they are still enjoying the ministries luxurious lifestyle and do not bother of any misconduct.

The corruption, miss management and poor administration of these politicians are a cause of all macroeconomic instabilities in Pakistan. Even poor security system is also due to their poor policies and evil acts. It is norm of Pakistani politicians that when any particular party become in power it accused previous governments for all sorts of problems and fails to tackle with the situation. Current government of Pakistan follow the same norm and blame Musharraf era for all sorts of problems and failed themselves to adopt effective and fair policy measures to tackle with all the issues and crises. Now I discuss various major crises which are mostly due to improper management, policy making and corruption of politicians.

Sugar crisis:

Sugar crisis were not new to handle with, they started in 1999-2000 when due to extreme heat stress its production decreased by 22% and it was forecasted in 2000 that further 17% production will be decreased in 2001. These percentages in production dropout are not negligible the current situation start arising from that time. The current government blame Musharraf government for this issue, no doubt extreme dropout in production occur in their era but despite this there was no shortage of sugar in this way during his time. I am not praising Musharraf era and blaming current government, the actual matter is to adopt uncorrupted fair policy measures. Pakistan is a third biggest country of producing sugar but despite this there is huge sugar crisis. Actually other than production shortage there is a problem of dues between growers and mill owners. Growers demand higher price i.e. Rs 250/40kg for their raw material whereas official rate is Rs. 100/40kg and millers complain about increase in production cost and imports. Other reasons of sugar crisis are late crushing by mill owners, stagnant can yield, low import parity prices and non-payment of dues to growers by mills. Growers feel underweight of cane at purchase centers and mill gates. Undue deduction by mill owners to growers is 10%. 65% of farmers decrease total sugarcane land area due to water shortage, behaviors of mills, late payments, increased input cost, diseases and rodent attack.

Government put forward various interventions like issuing export permit to mills, importing sugar on public account, controlling retail distribution below the market price through utility stores, sugar mill provided the government’s assistance in situation, supply to utility stores has been doubled to provide relief to the public. Nevertheless despite all these interventions there are no improvement in the provision of sugar because any sort of intervention by the government does not forget to take out its own benefit and, hence all sorts of policy measures are just slapdash. Huge quantity of sugar stocked by mill owners and lot of sugar smuggled through border. There could be no shortfall despite huge production dropout if all the sugar utilized lawfully within country. Most of mill owners are themselves politicians. They are at fault for non-payment of dues to growers and involved in smuggling through Afghan border. As politicians are themselves involved in illegal acts then definitely they could not adopt effective policy measure that could control the entire situation. Any policies made by such government left a lot of space for evil acts hence all policy measures are fraudulent.

On 9-febuary-2010 I saw a slide on news channel that” no one can buy sugar from utility stores without CNIC and children below 18 years cannot buy sugar”. In Pakistan so many poor people have no ID cards especially those who live in remote areas could not access cities to make ID cards. This policy adopted to minimize the flow of sugar also one person could buy only 2kg sugar once. In Pakistani huge families 2kg sugar is requirement of per day only. People have to daily lined up with ID cards to buy sugar. Government put strict rules on poor public but could not want to adopt such policy measures that could stop smuggling and illegal stocking of sugar by mill owners who themselves are politicians are linked with political groups. Sugar and floor and various expensive food products smuggled through Afghan border and others and police and politicians all involved in this act.

These all evil activities and financial mismanagement should be treated strictly and effective and transparent policies should be adopted by government to tackle with whole situation. However under the umbrella of highly corrupted leadership it may be impossible for government. Secondly to tackle with shortage in production there is a need for seed treatment in sugarcane cultivation by research institutes. Sugar mill should arrange and distribute high quality of seeds along with good and effective fertilizers, pesticides and insecticides at low rates to minimize diseases and rodent attacks. Demonstration plots should be organized by agricultural departments, NGOs and research institutes to enhance the local knowledge about better and advance farming activities.

Water crisis

In Pakistan main source of water is canal irrigation system including tow major dams Mangla dam and Terbella Dam. River Indus is the life line for Pakistan’s agriculture, nearly 450,000sqm. It is the largest river of South Asia having length of 1800 miles or 2900Km. Total supplies available to agriculture includes rainfall, surface water from river Indus and tributaries, ground water, sewage water and sea water. Annual rainfall in Pakistan varies from 100mm in Sindh to 1000mm in foot-hill and northern areas with average 400mm. About 60% come during monsoon. Rainfall contributes to 1650 thousand hectors meter of land. Thus 10mm of rain provides 100cubic meter/hec. Sea waters exist along 1,050Km coast of Pakistan and unusable due to salination but some palm and coconut trees can be grown using saline water. Sewage water could be used for production of crops like vegetables, fodder, oil palms, coconut etc by recycling.

Total quantity of available water is 160 million acre feet which includes river water and ground water. Rivers contribute 136 MAF and ground water contributes 24MAF. Out of this available water only 101.4 MAF reaches the modules, after deducting losses of the system i.e. seepage and distribution. 35 MAF water wasted in sea during floods every year, 45% lost due to seepage i.e. 45.6MAF and 15% lost due to improper irrigation system i.e. 8.4MAF. Hence total water arrived at farm gates is 56MAF. Total water required in 200 was 78.7 MAF there was a shortage of 22.9 MAF. It was predicted in 2000 that Pakistan will need 170MAF in future.

The first paragraph shows that there is lots of enough water in Pakistan whereas second paragraph immediately show shortage of water. Both the paragraphs in combine show that there is enough water to fulfill our requirements but the need is to use it properly through advance technologies and by repairing the systems frequently. Our government blames India to spoil the agreement did in 1959 over the distribution and use of Indus water. No doubt India has spoiled the agreement but Pakistan should be accountable towards use of its own water. Our provinces are quarreling over distributions and provision of water. Whereas distribution of country in provinces does not mean that everyone has its own territory to deal with, and he/she is not responsible for others. Our leaders of all provinces should understand that their consensus over distribution of all sorts of resources is in favor of whole country. Nevertheless unfortunately each province just wants to give loss to his brother province.

To resolve water issue it is important to solve political battle over distribution of water among provinces. On the other hand water should be saving from all sorts of losses through effective and costless mechanical techniques. There are lots of solutions available on Internet, research institutes should give solutions to all such problems through advance study of water saving technologies and government should effectively follow these without considering personal selfishness. Rainwater and flood water should store in time before it flows to sea. Available water resources should be evaluating and utilize effectively. Irrigation system should be repaired to improve and develop according to current needs also policies should be developed for judicious and effective use of irrigation water. In addition it should be evaluated frequently that what are the water requirements of various crops a changing weather effect the requirement of crops with the passage of time. In addition farmers should be well educated through seminars at local level by government, NGOs and research institutes about modern agricultural techniques along with analyzing, existing indigenous knowledge about cropping to reduce ill practices and enhance significant and effective practices did by farmers. Participation by farmers should be enhanced in policy making about water using, implementation of taxes and subsidies, about price fixing and about import-export rules and regulations. There should be effective coordination and understanding among farmers, water associations, government department and NGOs. Farmers should be put at center while discussing and solving agricultural issues. If Pakistan succeeded to overcome internal water problems then it could become strong enough to solve external water problems i.e. problem of Indus water treaty with India. We know very well that any influential personality could make its voice high and strong enough to listen and accept by others. Therefore Pakistan should develop itself like such a personality whose voice become influential internationally. For this they have to overcome internal problems immediately.

Energy crisis

There is another habit of our leaders that they wait for any issue until it do not rise as much that it  put them in deep waters. They do not want to adopt a policy of calling a surgeon before one is wounded. Energy crises are also ones of such crises. These crises do not occur naturally they are manmade. It could be taken as manmade disaster in Pakistan. Energy crisis is just like sugar crisis as there is again problem of payments there. Energy crises named as circular debt issue in Pakistan due to circular nature of non-payments of dues. In Pakistan energy crises raised when IPPs stopped to generate more electricity and at that time current government habitually start blaming previous government for energy shortage. Whereas this government immediately abandoned huge project of Kala Bagh Dam just after getting power by calculating its various environmental drawbacks. This was extremely poor decision of this government. They throw huge amount of money in dustbin foolishly. It was effective if this government minimize its environmental shortcomings by effective adjacent policy measures and through further small projects. The need was only of technical and transparent minds. Another example of such foolish decision of care-taker government was abandoning of Neelum-Jhelum project. It was constructed in 2003 at cost of .5billion it got abandoned by care-taker government. Later it revised by this government worth 5 billion. Delay costing the country fortune for extra 0 million.

Now it is easy to decide that how much previous government was at fault and how much present one. The circular debt issue should also be solved immediately by government in the beginning. The government has enough money to increase the number of ministers, to increase number of bullets proof cars , to visit foreign countries and to buy expensive power generators i.e. RPPs but they are unable to solve circular debt issue. Actually here again politicians take out their personal benefit. The current report by ADB on RPPs clearly shows the selfish nature of government. According to this report “there are major objections regarding the viability of the projects and tariff structure and doubted transparency in the deals which seemed to have made in hast. There are post-bid changes in the agreements that benefited the owners of the RPPs and NEPRA rules were also violated in these deals”. Besides various objections by the report one of the most important is that, government failed to go for the most economical solution and fully utilize the already existing capacity. (The News Sunday 7/02/10).Before the ADB report transparency international also highlights the government corrupt policy in this regard, but no actions were taken. It is important that Supreme Court should take notice of this government policy in the light of ADB report before the huge financial lose.

The shortfall of energy greatly influences the macroeconomic stability. Due extreme shortage of electricity about 400 factories closed down. The shortfall of energy cause loss of Rs.1 billion a day to the textile industry, threatening livelihood of 2.28 million textile workers around 500,000 already lost jobs. “Merrill Lynch ha estimated that everyone percent of GDP growth in Pakistan requires an increase in electricity supply of 1.25 percent. Thus, a GDP growth rate of 7 percent per year will require an increase in electricity supply of 8.8 percent”. (The News, Business page, 6/02/10).

The government should put their interests back and work for the prosperity of Pakistan. They should solve circular debt issue immediately and try to put forward more effective steps towards it solution. All the hydral power stations and dams should be repaired accordingly to rehabilitate the existing electricity capacity in Pakistan.

Miscellaneous issues and crisis:

Besides above discussed major crisis of Pakistan that contributes to macroeconomic instability, the government’s poor and corrupt policy making further dampen the economy and put the public fortune in ditch of risks, challenges and uncertainties. Insecurity situation rises with the emergence of this government which clearly shows the weaknesses of the government. After the successful Swat operation the gap between further operations give, place to terrorists to adjust themselves according to rising circumstances. Rising terrorism and insecurity hit the economic activities too much. Government should take effective and non-stop policy measures to tackle with the situation. However due to lazy and poor policy making, now they move towards negotiation with Taliban. Various circles in the politics of Pakistan are in favor of negotiation, but a common man question is that what could be the meeting point with Taliban? On the other hand according to Tehreek-e-Insaf there are good and bad Taliban, this mean we have to search out good Taliban negotiate with them and kill all other bad Taliban? If Americans ready to negotiate with Taliban it does not mean that we should also, because negotiations with Taliban do not effect daily life of America it would only effect the people of Pakistan and especially women of Pakistan. Whatever the Taliban are good or bad, but all the Taliban demands are to follow unislamic norms which abolish the human rights defined by Islam and further declared by United Nations Human Rights declaration 1948.

Rising insecurity and terrorism give economy as much loss in the beginning of this government that it becomes confused and situation crossed their ability to tackle. Hence due to extreme rising balance of payments government start lending. In the beginning all the foreign aid resources refused government for cash funding due to lack of trust. Finally government knocks the door of IMF. After this other foreign resources also open their doors as government got committed with 11 tough condition of IMF out of 16. Now the debt burden increased a lot and current values of debt certainly predicts the further failure of economy, rising inflation that could increase the number of people below poverty line which is already 34%. Now the public debt is becoming more than RS.8.1 trillion. In December 2009 domestic debt was RS. 4293 billion and total external debt was 794million. The improvement in various economic figures is also due to influx of these huge debt amounts. In the future major portion of GDP will be utilized to repay these loans and, hence it further deteriorate the social indicators of development i.e. education, health, shelter, employment, poverty and other developmental projects. With rising debts now a single Pakistani owed Rs. 46,648. On the other hand increasing expenditures do not allow economy to become mature which is mostly security related. The war on terrorism alone has cost more than billion while the aid received to combat is very less that is billion only. Other than terrorism rising riots in Karachi (a big commercial and industrial hub of Pakistan also known as mini Pakistan) because of ethnic and linguistic issues also hits the growth process. Two coalition political parties of Sindh i.e. MQM and ANP quarrel over language issues putting aside their real duties towards the development.

There is another very important issue i.e. tax evasion. According to joint report of FBR Pakistan, World Bank and Andrew Young School of Public Policy on Tax policy of Pakistan, the total tax evasion in Pakistan during 2007-08 was Rs. 796 billion. It is estimated that globally tax evasion every year is around US 5 billion. Pakistani tax evasion is 4% of overall global tax evasion. Although there is hardly any country in the world which could have excellent tax system but Pakistan is among the worst one. SBP repeatedly suggests in its various reports over economy including quarterly report that tax-to-GDP ratio should be improved. Mostly people related to business community, bureaucrats and politicians are taxed defaulters. According to report by World Bank Pakistan has a potential to increase Tax-to-GDP ration by 3.5 percent for next five years and if this happens it could overcome a lot fiscal deficit.

All the above discussed problems are easy to solve but the need is only of transparent, accountable, effective and efficient government. Pakistan is touching high ranks in corruption according to transparency international reports. Our politicians are good at deciding and according to personal interests, evidently they have technical and brilliant minds to adopt good policies but they use their brilliance in making policies in favor of their own bank balances which are mostly in foreign countries. Any politician in Pakistan promises the public for their prosperity before taking power but after getting power they only consider their own interests. Our poor people do not have shelter to save them and their small babies from extreme hot and cold weather conditions and our ministers enjoying foreign aid and design such projects and policies that could further enhance their bank balances by sucking sweat and blood of poor people. They may take three times meal in a five star hotel styles but our poor people’s babies could not have even single time a feeder of milk in a day. I don’t know how our politicians think to do evil acts against innocents in front of their own eyes.

Conclusion and Suggestions

With the help of media, news reports and various reports by international institutes available on Internet we are able to predict the economy of Pakistan. It is needed to put forward immediate measures to tackle the future threats to economy. In this regard first there is needed to clean completely the foundations for corruption. NRO declarations as unconstitutional sort out more than 8000 people who get benefit of this ordinance and, save them after misconduct. Supreme Court has now opened all these cases but there is a need of immediate action to save the Pakistan. Our president along with other 33 companions in the government also enlisted in NRO beneficiaries it is the extreme bad luck of Pakistan to have such leaders in power. In the presence of such leaders not a single positive policy measure could benefit the country because corrupt minds of these politicians do not give place for prosperity.

It is required to establish transparent system to put policy measure to solve various above discussed issues. Sugar crisis, energy crisis, water crisis and all other are just due to corruption. Various international reports showed the personal interests of the politicians towards their interventions to solve the problem. Supreme Court should take notice of these policies on international reports. Independent institutes should all condemn politician’s corruption and put forward solid steps to stub down the corrupt politicians

Pakistan is an agricultural economy based country. Agriculture has the main share to economy. It contributes 21.8% to GDP, providing employment to 44.65% of labour force and occupies nearly 60% of total exports. Although in the early years after independence of Pakistan the agriculture share to GDP was 62% but with the passage of time it decreased due to IMF conditions on one hand and poor policy implementations by different governments on the other hand. Various circles blaming climate changes for this decrease but despite huge climate change we till have yet enough water and land to cultivate enough to use locally besides export but the need is only of effective work and policies. To tackle with the agriculture losses water issue should be solved immediately and advance fertilizers, pesticides and insecticides along with good quality seeds and machinery should be introduced in the country. Agricultural problems should be addressed and solved by participatory approach and loss of land due to salination should be rehabilitating and using advance technologies available worldwide.

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