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Pakistan: Impaled on the horns of an economic dilemma

By Dr. Niaz Murtaza Pakistan’s economy is currently afflicted by two problems requiring diametrically opposite remedies: economic stagnation, which dictates expansionary policies, and inflation caused by a fiscal gap, which requires contractionary policies. Pakistan thus suffers from stagflation. Given their conflicting remedies, should Pakistan prioritize economic growth (real stability) or inflation control (financial stability)? Neoliberal economists always prioritize financial stability, arguing that it automatically ensures real growth. The IMF and the US (which suffers a larger deficit and debt burden but does not fully practice the flawed neoliberalism that it preaches) are asking Pakistan to raise sales taxes and eliminate subsidies. This strategy will certainly reduce the fiscal gap. However, it may not reduce inflation since sales taxes and withdrawal of subsidies on utilities, petrol and food can be inflationary. Moreover, it … Read entire article »

Filed under: Economy, Pakistan

Pakistan’s budget: Policy sans public

Raza Rumi Last week, a former Minister while referring to the budgeting process remarked how the budget documents were accessible to only 3% of the parliamentarians. A lady MNA whom I met after the budget speech was ploughing through the shabbily printed pink documents, looking for the allocations for regulatory bodies and both of us could not find the relevant figures. This should be enough to describe the inaccessibility and obfuscated nature of the budgeting process in Pakistan and several other developing countries. Executive board-room syndrome: Lack of public consultation in the budgetary processes is another hallmark of how the executive formulates the national priorities and finances them. Our state considers the people as ‘beneficiaries’ and ‘recipients’ of the wise decisions made in air-conditioned secretariats and donor board-rooms. This is why the … Read entire article »

Filed under: Economy, Pakistan, Politics, poverty

THE GREAT RECESSION, THE EUROPEAN FISCAL CRISIS AND LESSONS FOR PAKISTAN. Part 3: The European Debt Crisis

The Exploding Debt in Europe By Kashan Wali, exclusive to the PTH   Wealth cannot be artificially created Finance in a real world relies on underlying wealth of a society. Governments cannot create wealth by printing money. Print too much money and it will lose its value. A fall in the value of money leads to inflation. Inflation viciously attacks the value of savings of the population. As population loses the stored wealth, the population becomes dependent on the state. State has to pay more now for healthcare, education and in extreme situation, food and shelter for population that is going poorer by the day. Either way, unless the underlying wealth (net output of goods and services produced) does not increase, a country cannot become wealthier. Let’s say state tries to pull another trick here; … Read entire article »

Filed under: Democracy, Economy, Europe, New Writers, Pak Tea House, Pakistan, poverty, public policy, state, USA

Pakistan's economy: Hard times

by Raza Rumi Two years after the civilian government took office, there are few signs of economic recovery and this does not augur well for the fate of democratic governance in Pakistan. We are somehow doomed to bear the brunt of authoritarian regimes in social and economic terms. By the time a civilian government puts its house in order, the long and short marchers are ready to take over. The story this time has been no exception. Following the trends of the 1960s and the 1980s during the Musharrafian decade, unsustainable growth rates were touted as the raison d’etre for the apparent efficiency of a military regime. It is true that the Musharraf era inducted Pakistan into the globalized economic system, boosted domestic demand for consumer products and attracted huge doses … Read entire article »

Filed under: Pakistan

Govt should do more

Bilal Qureshi I have noticed strange things in Pakistan during my recent stay there, but two things stand out for me. One, it is the unbelievably weird ability of Pakistanis to connect every bad thing to American and how America with Israel and India is relentlessly trying to destroy Pakistan, but Pakistan is surviving against all odds. Second, it is the unusual talent of Pakistanis to ask the government to solve all there problems, do more, and more and more, without being specific. For example, prices of daily commodities go up, and the people start repeating the same thing: government should bring down the prices … Read entire article »

Filed under: Democracy, Economy, Pakistan, Zardari

PAKISTAN: Eid Shopping Marred by Inflation, Fear of Violence

By Beena Sarwar/IPS Shopping for glass bangles — an Eid must — has been less than brisk this year. KARACHI, Oct 1 (IPS) – As the Muslim holy month of Ramadan draws to a close, the shopping frenzy around Pakistan increases in preparation for Eid, the joyous three-day festival of thanksgiving to celebrate the end of a period of abstinence, including dawn-to-dusk fasting. But preparations for the Eid festivities in this predominantly Muslim South Asian nation have been marred, this year, by the twin monsters of escalating inflation and violence. Inflation, the highest ever in Pakistan at 25 percent, has definitely impacted Eid spending. One young woman, in her late 20s, out on a late night shopping excursion with her husband told IPS that she normally gets three or four outfits made for Eid. “This … Read entire article »

Filed under: Citizens, Economy, Pakistan

Inflation at all-time high of 19%

By Tanveer Ahmed KARACHI: Inflation reached all-time high of 19.27 percent in May [2008], mainly because of growing prices of food items. The coalition government has already hinted at missing of inflation target of 6.5 percent in the Economic Survey released Tuesday and believed the average inflation settling over 11 percent by the end of financial year 2007-08. Analysts, however predict the average inflation will be closing at 12 percent or slightly above that in the fiscal year, which will end June 30, 2008. Data released by the Federal Bureau of Statistics Wednesday showed that food inflation, measured through the Consumer Price Index (CPI), swelled to record 28.48 percent in May, highest in over three decades. … Read entire article »

Filed under: Economy, Pakistan