We are victims of our own wars. Inside the economic spectrum of our country lie the most formidable challenges of economics and social strata. We are in a spiral that dominates the markets in which we thrive, prosper and survive day in and out. Touching the pulse of the nation, our stocks markets are adamant to stay alive despite the constant capsize due to excessive compulsive disorder.
In our daily lives, what people basically want is for their work to get established, managing savings, net-worth, investments and build on these factors as part of their personal business strategy. As our economic engine, the city of Karachi has been deliberately targeted for chaos to infiltrate the heart of our economy- through our people with 830 million generated through the “ black pearl “ – our black currency.
Over 30,000 acres of government land is squeezed every day by Rs7 billion annually and Rs230 million daily by the land mafia –inducing pain and suffering within this already struggling economic hub of Pakistan. To back that up , extortion mafia dominates the city business centers pulling up to 10 million daily , while over 210 million goes to the police through bribes. Over 275 gallons of consumable water is illegally sold earning an approximate 100 million a day , for which we pay rupees 3000-5000 on average to the tanker mafia, that itself further generates 10.4 million for the black economy. Another 2.4 million is earned through various illegal parking spots, 150 million earred through drug dens and a higher 10 million a day is earned through illegal electricity theft, for the last decade, at least. The rate of corruption stands multiplied in the last 10 years of governance by the previous last two governments.
We are reliably and insufficiently ill equipped to handle the issue of the block economy until we root out the above avenues through extreme and severe action measures without prejudice. The latest anti- corruption drive is a welcome chance after a long time as the new government sets to get the record straight and promises accountability which is yet to be practically experienced. How can we ensure consistent peace and good governance without dealing with this menace first, despite high bank earnings through funded and non-funded fee income , tax incentives, trade opportunities and consumer retail spending on an all time high in Karachi. IMF and ADB have further ensured 500 million and 850 million dollars of fund to Pakistan , but our recovery drive for revenue generation can never match up to the required targets committed to them, if the “ black pearl “ hijacks the proceeds. People behind this huge operations must be brought task through swift action and prudent justice.
As we look to 2015 and beyond, the government-economic managers need to decide and bring out the right answers. Practical economics indicates that doubling the supply of money will only double the prices, but will have no consequences for other parts of the economy. In Pakistan, higher fuel prices means higher travel costs for the commoner here and a lower devalued rupee obviously means reduced buying power and endless pain, to match the need with the affordability. The GDP growth rate at 7 % is challenging but achievable through concrete reforms, while investment to GDP ratio at 20% is excellent, if attained. If they wish to reduce public debt by 57 % of the GDP and that to in the next year or so, they better investigate where the money is going , from the top end of the food chain to the bottom line slums of this city and elsewhere in the country.
IMF is extremely critical to begin with. The 6.68 billion dollar package is the tip of the iceberg. The country s medium term rating remains strained , with a lot of criticism over the judiciary s constant intervention that makes governance seem weak, ironically a fact that we just cannot seem to hide. This in their view, complicates provincial funding agreements and also impacts inter provincial disorientation and dissent. Pakistan also needs to also watch out with the inward remittance spillover effect. We cannot import everything. Plus low central bank reserves are always a issue and a risk. Inflation, low savings and a low investment to GDP ratio is a challenge. So reforms will have to concrete and decisive.
With the new president in place, the ceremony is over and work needs to begin as PM already has executive power to ensure policy measures and action plans are looked into detail and delivery is ensured. Recent steps have in fact, reduced the daily strike rate down in Karachi by a few percentage points and the law enforcement machinery slowly picks up pace. Crime is directly proportional to economic earnings and the GDP of Pakistan which in itself is progress, if achieved well. With the APC – All parties conference held recently, the momentum must down be driven down by political rhetoric as in the past or by the external influences that have dominated our system for ages. The black pearl is destroying our systems, eating away our intellect, stealing our valuable human capital and investment climate and clearly must be discovered and destroyed completely. Inside the blackness, is the answer of our further prosperity and progress. The real problem which is aiding this black economy to flourish is that “political im-maturity” which indulges in lack of respect for law and induces criminals to get away with the worst crimes against society and the economy, proving that honesty and decency are not the best policies for success in life, and actually encourages predatory behavior and broken leadership. Fix that and we fix this broken city and this country from the black economic invasion.
Zeeshan Shah is a banker and a political analyst on public policy and governance.