LONG MARCH LEFT NEGATIVE IMPLICATIONS ON TUMBLING ECONOMY
A LOSS OF RS 50 BILLION
Mar 23 - 29, 2009
The lawyers' long march, which started on March 12 and was called off on March 16 after announcement of Prime Minister Syed Yusuf Raza Gilani to restore the deposed judges, has not only created concern among the donors but also left devastating effects on the country's economy.
Due to hurdles created by the government through containers, transportation halted for about six days that caused serious blow to the country's economy.
Experts say the government would lose billions of rupees in taxes on the goods that were not transported. The government could have earned 15 billion rupees from tax collections on the goods that could not be transported through these unused trailers and containers, they added.
According to an estimate, during these five days of turmoil Pakistan's GDP lost at least Rs 50 billion (625 million dollars). The blockade also delayed shipments travelling overland to the port in Karachi, causing losses to exporters. Such losses in business would increase bad loans and amplify the country's economic woes.
Businesspersons were of the view that the roads blockings stopped supplies of goods across the country. "The crackdown on the lawyers' long march disrupted supplies of day-to-day commodities from province to province," they said.
According to reports, the International Monetary Fund (IMF) is said to have expressed concern over the current political turmoil in Pakistan, fearing that the incumbent government would not be able to achieve the agreed economic targets if unrest continued.
The Asian Development Banks Country Director for Pakistan Rune Stroem also expressed serious concern over political instability in Pakistan, and feared that the situation could upset the on-going lending programmes of the international donors, including the International Monitory Fund, the World Bank and the ADB.
According to former finance minister, Dr Salman Shah, IMF could express concern about political uncertainty if it was expected to have impact on the economy.
The western world wants to see Pakistan as an economically developed country that has much potential to present handsome growth in future provided the political stability prevails in the country, said the chief operating officer of a renowned brokerage house Abbasi and Company, Syed Muhammad Ishaq.
He stressed the need for more reconciliation and said that both the parties should avoid confrontation so as the economy may avert negative impact. "The entire nation is pleased to listen to the news of restoration of judges but it would be in the best national interest if the past issues are not touched. He also said that despite of worldwide economic recession and political uncertainty in the country, majority of the companies listed with the bourses have so far announced reasonable results, which could help sustain the stocks business in coming days.
The United States will inject US $.15 billion into Pakistan's economy as non-military aid. The aid will be provided for five years, which could be enhanced three times for the next ten years, he said.
The oil prices in the international market have also come down to judicious level. This would not only help saving foreign exchange on the oil import but would also push up the foreign exchange reserves up. Moreover, in the backdrop of expected bumper wheat crop, Pakistan may not need to import wheat this year that may also contribute to the development of foreign exchange reserves. He, however, urged the government to reduce the interest rate by 200 points to give a boost to the industry. The reduction in mark-up is need of the hour to accelerate economic activity, he maintained.
The Pakistan Industrial and Traders Association Front (PIAF) Chairman, Irfan Qaiser Shaikh, said shortage of electricity was the biggest issue that merits priority on the part of the government and same way the issue of law and order also calls for a focused attention by those who are sitting at the helm of affairs. He said that the government should now start dialogue with the business community to stop economic turndown and to give boost to industrialization.
The former Vice-President of Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Azher Syed Butt said that political stability is necessary to put the country's economy on right track. He said Pakistan was losing its export market while India, China, Malaysia, and Indonesia were capturing Pakistan's shares in the world market. He said that export of sports goods, musical instruments, and other items have reduced considerably from Pakistan and China is the major supplier of goods at very low price in export market. He said that foreign buyers are already reluctant to visit Pakistan due to law and order situation and added that recent political turmoil further pushed them to stay away from Pakistan.
Vice-Chairman FPCCI's Standing Committee on Textile Ancillaries, Faraz Alam told PAGE that the country's textile exports may face loss of Rs 4.8 billion, as the foreign companies of EU, Russia, and US have refused to take the Pakistani textile products due to economic recession.
He said that already the textile industry was suffering from high cost of production due to constant increase in gas and electricity tariffs while the average export target of textile products for current fiscal (2008-09) has been set at $11 billion or to an average $923 million per month by the government.
It may be mentioned that textile exports of the country during the first seven months of the current financial year decreased by 3.79 per cent as compared to the corresponding period of 2007-08. Exports of textile products during January-July (2008-09) were recorded at 5.82 billion dollars as compared to exports of 6.05 billion dollars registered during July-January (2007-08). Likewise, the textile exports during the month of January 2009 decreased by 8.98 per cent as compared to December 2008. Exports during January 2009 were of $753.9 million as compared to exports of $720.3 million recorded during December 2008.
Faraz said, "Our textile exports are losing the competitiveness in the international market. That is why our foreign export orders have reduced by 20-25 per cent as compared to the last year."