Islamabad
Renowned Economist, Kaiser Bengali, while addressing a special brain storing session in Islamabad, has said that Pakistan is a rich country in terms of resources. We can give loans to other countries, if the elites of the country became loyal to country .
Country has been bankrupt for the past ten years. The IMF has now lost faith in us. We borrow by selling political autonomy. The country is currently being run by a casino economy, a gambling economy. Today, the state has to decide whether to save the country or not.
In his address from a special meeting at the Press Club, he said that sixty government departments should be abolished completely.
Foreign travel expenses of ministers, staff and their families will also have to be reduced. 40 years of bad things will not be corrected by any shortcut.
Our biggest expense comes in the form of diesel costs for freight delivery, which can be eliminated by enabling rail.
Rail instead of truck can save 15% of our cost. Today the government of Pakistan cannot borrow from the State Bank of Pakistan, but private banks can, from which the government borrows and the private banks benefit.
Pakistan is a rich country in terms of resources, if elites are sincere with this country and don’t prioritize their interest over national interest then we can be able to give loans to other countries.
The country cannot be run on taxes, the current deficit will not be covered by tax enforcement. The general sales tax hike has shut down the industry.
Renowned Economist said that the US$ 7 billion agreement with the IMF has calmed market and created the usual sense of complacency, however, the crisis and the seriousness of it has not subsided. The economy continues to be surviving on the debt-ventilator. The economy will come out of the perpetual crisis mode only if the Budget and (Foreign Trade) deficits are brought down at least to pre-2002 levels.
Why is it absolutely essential to reduce the Budget and (Foreign) Trade deficits? Assume 100% of Revenues (Tax + Non-Tax) are used up for financing Expenditures (Defence- Civil Administration + Subsidies).
And current Debt Service (Principal + Interest) commitment is Rs 1,000 million, it will need to borrow Rs 1,000 million.
If all of Revenues covers only a part of Expenditures, i.e., there is a shortfall of Rs. 100 million. total borrowing need will be Rs 1,100 million.
Thus, borrowing needs will continue to grow year after year. Unless, total Expenditures are brought down to the level of total Revenues.
Why is it not possible in the short run to increase Revenues to bridge the Budget deficit? Because the economy is stagnant and does not have the capacity to generate more Tax Revenues Additional efforts to tax is causing businesses to shut down, causing loss of revenues, exports and employment.
The above logic applies to the (Foreign) Trade deficit as well, an additional aspect of the Trade deficit is that loan repayments have to be made in foreign exchange, (which because of the already existing deficit) has to be borrowed afresh; requiring us to submit to harsh IMF conditions.
