Oct 27 - Nov 02, 2008

While government is keenly seeking exogenous financial assistances to help it resuscitating the national economy besieged with meltdown admonition, it can concurrently exercise some practical indigenous solutions to overcome the crisis if it tilts slightly towards moderating approaches of running state affairs. By purging non productive expenditures, government will have an access to sizeable liquidity in short term, thereby creating an example to be followed in long term to prevent side-effects of expenditures overrunning revenue in-hand.

One of such non productive expenditures is caused by excessive wastrel of gasoline and diesel by state functionaries. Officials consume petrol or diesel in vehicles given to them by the government and enjoy monthly allotted fuel quotas. If these vehicles are converted to alternative energy driven engines like CNG or LPG then government can save a substantial volume of petrol and diesel and reduce oil import bill to a greater extent.

Oil import bill of the country is increasing at a considerable speed which needs an urgent review that whether the energy is directed at a right place or being lost in vain. There is missing a link between growing consumption of petroleum products in the country and economic growth as this consumption is not bringing relief to society at large and nor it is improving performances of agriculture and industrial sectors which must reflect energy thrust.

No restraint is seen in the rising demands of petroleum products in the country even so industrial efficiency continues to decrease and public woes to increase. Routine power shutdowns and rising electricity tariffs are rendering sever losses both to industrial activities and public lives. Only this quarter oil import bill depicts startling rise. $1.8 billion worth oil import in staring three months of last fiscal year turned out to be $3.8 billion in the corresponding quarter of this fiscal. This import payment was near equal to trade deficit of the similar period.

This significant increase was recorded in the wake of slowdown in economic process and LSM growth fallout. Stockpiling of petroleum products is often practiced.

Over 80 percent of petroleum products demand is met through import while domestic production of almost 70,000 barrels per day is able to fulfil just approximately 18 percent local demands. Annually, Pakistan manages to export certain volume of petroleum products as well, which are mostly by-products of refining processes. For instance, in July, August, and September of FY09 $251 million in aggregate was earned through export of naphtha, mogas, etc.

Taking stockpiling in assumption, it is pronounced that government can restrict instant shift of international crude price rise burden to local consumers. This assertion is supported by the practice of buying oil in advance for almost a month. Recently international price of crude behaves very much in volatility and fluctuates abnormally. Within a small track of a year, the crude price skyrocketed to all time high of $147 per barrel and nosedived after 17 months to $65 per barrel in last week. Abruptly, government of Pakistan in previous few months resorted to upward revision of local petroleum products price every time price of crude in international market received a push. Seldom is this increase missed in each fortnight review.

Upward revision was attributed by the government to appreciating crude value. But, downward revision was excused lamely by claiming adjustment of decrease with an already given subsidies on petroleum products. Recent extreme plunge of crude price has occurred first time since May 2007 when ex depot sale prices of gasoline and light diesel oil in Pakistan were hovering around Rs. 53.70 per litre and Rs. 32.57 per litre respectively. Now, they are sold at Rs. 81.66 and Rs. 60 per litres. In accordance with the internationally linked price mechanism local prices should be reduced. If buying in advance petroleum products, government should react sensibly to price rise and show prudence while revising prices.

Pakistani oil contracts attach to Saudi oil deferred payment that is get-today-and-pay-later arrangement. So in any way, excuse of soaring local price of petroleum products does not make sense. People are already struggling hard to make their both ends meet. PKR-dollar disparity also raises import price.

Despite that looming liquidity crisis makes government resort to easy ways of generating revenues of taxing consumer goods, withdrawal of subsidies on utilities, increasing rates of petrol, diesel, kerosene, etc. economic managers take hard works in possession and guide government of measures not painful to masses.

As a matter of fact, time is ripe of exorcising evil sprits of elements whose bon Viviane bases on exchequers monies. With exhausted resources and exorbitant liabilities the country deserves to experience a halt in looting spree and open-handed expenditures by public servants, be parliamentarians or bureaucrats or other government officials. Cutting short (foreign) itinerary may also serve as a halt.

Mere dependence over international finances may- even if restocking liquidity chasm-ward off economic catastrophe for the time being. Unless resource utilization is rationalized such finances will only keep on strengthening external debt trap that has already engulfed the economy with over $42 billion.

Besides, IMF has itself intimated that its financial assistance to Pakistan would require some painful economic measures. Importantly, conditions of diminishing public developments spending and administrative measure of monetary tightening would throw bombs at industrial activities and standard of living of people. Spasm of this pain is greatly endured by common persons.

Looking for external consultancy is not bad but managerial skills work well at a time when solutions to problems are sought within internal deficiencies that are attributable to sheer circumvention over own faults. Authorities should direct all state functionaries to cut as much as possible departmental non development expenditures. We should realize that we belong to a poor nation and travelling in luxurious cars on state expense and reposing in glossy leather chairs in parliaments within cosy atmosphere do not suit us and stand against any ambition of getting economic wealth for all.