Published Date: Jan 24, 2012
POLITICAL INSTABILITY PERPETUATES ECONOMIC UNCERTAINTY
Politics deter economic reforms and political instability perpetuates economic uncertainty, said Dr Ashfaque H. Khan, while speaking at seminar here on Monday. The seminar “impact of current political deadlock on Pakistan’s economy” was organized by Sustainable Development Policy Institute (SDPI). Dr Abid Q. Suleri, Executive Director, SDPI chaired the proceedings while Dr Vaqar Ahmed, Research Fellow and Head Economic Growth Unit, SDPI also spoke at event.
Dr. Abid maintained that corruption had never a major impediment in development and nor conflict stop countries from economic growth as seen in the case of Sri Lanka and so many other countries. It’s the right economic policies with firm implementation which results into economic growth, He added. Dr. Suleri said Pakistan, over the years, lacked policy consistency and certainty and had achieved sort of economic growth which is not in sync with human development. He said due to current political scenario, state machinery is not functioning and is looking towards how political situation will manifold. He called for normalization into civil-military equation and called upon political parties to declare their manifestos as soon as possible before the people of Pakistan. He also stressed on political parties to announce their economic policies as well as to declare shadow cabinet and especially name their proposed Finance Minister’s.
Dr Ashfaque expressed that political instability results into economic instability and also breeds corruption, mismanagement and bad governance which ultimately affects poor people. He said that in past four years, current week government seemed hanged in air almost all of the time and only to remain in power at what ever cost ignoring reforms or service delivery. He said that current government failed to implement reforms and call back several reforms on manipulation of smaller allies in government such as on issue of value added tax.
He said that in a last four years, government appointed 4 SBP governors, 4 finance ministers, 4 secretaries, 5 CBR Chairman’s and in situation where is no stability in economic team how can we look for consistency and stability of economic policies , he questioned. Talking of current economic situation, he said that difficult decisions and reforms are not expected at this fag end and hence crisis will continue and keep compounding the situation and whosoever will win the next election will face the extreme economic hard times. Dr. Ashfaque predicted further depreciation in rupee adding that a depreciation of one rupee would increase Pakistan public debt by almost 60 billion rupees with also increasing the interest rate , inputs costs, subsidies and pile up of circular debt. He said that financial accounts are entering into danger zone and if gap in current account deficit continue to rise it will dry up currency exchange reserves with serious consequences to exchange rates.