After the year 2011, Pakistan’s external debt has almost doubled, while domestic debt has increased sixfold. Following the general elections, the democratic process of power transition has been completed in the provinces of Punjab and Sindh. Maryam Nawaz has become the first woman in the country’s history to be elected as the Chief Minister of Punjab, while Syed Murad Ali Shah has been elected as the Chief Minister of Sindh for the third consecutive time.
Sessions of the provincial assemblies of Khyber Pakhtunkhwa and Balochistan are expected in the coming days, and a new federal coalition government will be formed after the session of the National Assembly. However, the President of the National Assembly should refrain from causing a conflict by not summoning the assembly. They should play a positive role in strengthening the democratic process.
In the days to come, provinces should be given their due rights in accordance with the constitution, and there should be no environment of confrontation between the federation and the provinces in any way. Any objections to the election results should be addressed according to legal procedures, rather than resorting to street politics.
The Election Commission, Election Tribunal, and Higher and Supreme Courts should address objections to the election results, and if there are any changes on a legal platform, the losing party will have to accept the results gracefully. The country cannot afford any form of street politics, as the country is already suffering from the worst economic conditions, inflation, unemployment, and all these serious issues were caused by the politicians.
Politicians must set aside their differences and work together to find solutions for the country’s problems. They are all responsible for the current issues, and politicians have the opportunity to address these issues in their entirety. Everyone must work together for the country’s sake, putting aside opposition, ego, and personal agendas.
Currently, every child pays taxes, which will continue until their last breath, yet the burden of loans is always looming. Can anyone tell the poor people where these loans are being spent? We are facing challenges such as terrorism, poverty, food shortages, disease epidemics, inflation, unemployment, corruption, and extravagance due to which daily problems are increasing.
A recent economic report reveals that the new government is facing the burden of internal and external debts. The mountain of national obligations is increasing every year in which total debts and obligations, including internal and external debts, amount to 77.66 trillion rupees ($271.2 billion). Pakistan’s external debt is mainly obtained from creditors.
Pakistan’s per capita debt increased from $823 per capita in 2011 to $1122 per capita in 2023, which is a thirty-six percent increase over twelve years. The country’s debt is increasing rapidly compared to its revenue, leading to financial losses and requiring more loans to be taken immediately.
Since 2011, Pakistan’s external debt has almost doubled, while domestic debt has increased sixfold, with the country having to repay an estimated fifty billion dollars in debt which is thirty percent interest. This dire economic situation will force the government to seek assistance from international financial institutions and other lenders who will impose stringent conditions on any financial assistance or loan offers, meaning that the government will have to reclaim more subsidies apart from increasing prices, which are still causing problems for some sectors of society.
Instead of imposing agricultural taxes, the government could potentially increase the burden on existing taxpayers. Such actions will further exacerbate the problems of the middle class, who are already struggling with rising inflation and taxes. The new government may be forced to take more unpopular actions which without federal concessions may not be supported, posing a risk to government stability.
It is extremely necessary to increase revenues for the country’s economic stability, so immediate steps need to be taken to reduce production costs of our products in order to compete with the cheaper products of other countries in the global markets, as the cost of production is higher for our goods.
Therefore, our exporters are facing competitive and competitive challenges in the global markets because when international importers have access to cheaper products from other countries, why would they buy our expensive products, when our cost of production is higher, how can we sell our goods cheaper.
In this regard, immediate actions need to be taken based on consultations with stakeholders to reduce the production costs of our export products, which can also lead to an immediate increase in revenues where the cost of producing our export products is reduced.
During the recent general elections, all major and minor political parties in the country felt the need for economic revival, and it is hoped that this time, unlike in the past, necessary reforms will be made in the national financial matters. Currently, Pakistan is facing major financial challenges, including a reduction in foreign exchange reserves and the payment of bonds worth billions of dollars in the future.
The funding program with the IMF is set to end in April 2024, and there is a risk of possible delays in negotiations with the IMF. The question arises as to whether the upcoming government will be able to provide the country with extremely necessary economic stability? Taking stock of the major challenges facing the country and their potential solutions reveals that poverty is not simple but rather a complex issue with economic factors at the forefront.
Comprehensive economic reforms are essential to improve the financial framework of the country, increase funding for programs that benefit low-income people, increase public spending for social programs, and improve access to financial markets. These measures will allow the government to allocate funds for social and developmental initiatives.
The President of the Pakistan Muslim League-Nawaz has said that unity is necessary to eradicate poverty, unemployment, and ignorance from the country. The mutual alliances for political and economic stability were not required as much before. We must strive together while keeping all differences aside for economic stability.
In fact, we need to make fundamental and intelligent decision-making. In the recent past, gas, petroleum, and electricity were received at lower rates than the actual prices, resulting in an increase in circular debts, which has now become a menace. Economic development is not possible without political stability. It is possible that the Pakistan People’s Party will distance itself from unpopular economic decisions, while the Pakistan Muslim League-Nawaz may want the Pakistan Peoples Party to share more responsibility for further increasing inflation, affecting more than sixty million people living below the poverty line.
By looking at the governance system of Pakistan, it seems that reducing non-productive expenses is not possible when loan repayments are necessary and the demands of the independent power producers should be accepted without any turmoil. Therefore, the government will have no choice but to focus on social sectors rather than resort to austerity measures to deal with social sectors.
The government is likely to cut development budgets and change the shares of federal units to reduce federal expenditures, which will help in reducing federal expenses. The federal government will try to delay payments to the provinces, affecting the development of social sectors in the provinces.
For the establishment and continuity of democracy, all institutions of the country must limit themselves to their defined responsibilities, the parliament should become an empowered institution, the Election Commission should work as an independent organization, and the judiciary should give political institutions the opportunity to work. It should also be kept in mind that the seed of democracy cannot become a full-grown tree overnight, so democracy should be given a chance to work patiently. This plant gradually grows and bears fruit.