Immediate Need To Negotiate With IMF After Devastating Floods

Pakistan is at high risk from climate change and natural disasters. Events such as earthquakes, flooding and drought have troubled the country for years, and regularly ceasing the development process of the country as well as livelihood of hundreds of thousands of families in far flung areas. Due to increasingly devastating extreme weather changes, our incapacitated people are facing many challenges and need immediate assistance.

The UN Secretary General has said the world must give an impoverished Pakistan a massive help in recovering from the just recent otherwise the years will be passed and total recovery likely to be incomplete. Months of heavy monsoon rains and flooding have killed thousands of people and badly affected 33 million while millions of people have become homeless. Although the aid from the United States, the United Arab Emirates and other many other countries have begun arriving, but there is much more to be done to help a country which has the lowest economic growth among the developing countries.

We are moving to other disasters due to climate changes in Pakistan and we must anticipate just now. The UN chief during his trip has appealed the international community for $160m in emergency funding to rescue Pakistan from shattering floods as Pakistan responds to climate catastrophe.

Revival of Dismal Economy of Pakistan
Socio-Economic problems
Pakistan is a developing country and faces a host of socio-economic problems including political instability as a major burning current issue that aggregates the problems further. Currently, one of the big social problems for Pakistan is poverty. 70% of the population of Pakistan still lives in villages and agriculture encompassing livestock sector, is a major source of economic development of Pakistan. Unfortunately catastrophic floods have destroyed our agriculture and livestock sectors. Our economy is already confronting with consistently combined increase in inflation and increase in unemployment. Other key issues are as under,.
• The current account deficit at present is 2.6 Billion Dollars and Govt. decides to withdraw Rs. 146 billion subsidies being given to domestic consumers.
• Continuous demands of IMF to further tightening Taxations and Subsidies.
• Hostile Monetary & Fiscal Policy Focusing upon Vulnerable Poor Class and Business Entrepreneurs.
• National GDP has reached 1.9% according to the sources and inflation particularly in Consumer Price Index (CPI) has gone up to 15%, which has become extremely alarming.
• The national economy has taken hold of economic vicious circle.
• Although fiscal deficit has been decreased by suppress of imports and development funds of the country, but this has further deteriorated the investment and economic activities in the country.
• Administrative irritations of doing business. National Per capita income is desperately decreasing and disposable personal incomes are therefore even more decreasing.

Urgent Remedial Measures to pick up the Desirable Objectives
The following remedial measures are immediately recommended.
• Moderate Monetary & Fiscal Policy
• Friendly Investment Measures
• Increase Govt. investment at least by 15%
• Remove Taxation Complications
• Rationalize the utility bills particularly Electricity Bills and Petroleum prices to increase the purchasing power of consumers.
• Moderate Policy of Subsidies and Encourage Subsidies to both Consumer and Producer Sector.
• Strengthen Internal & External Audit System.
• Stable Import-Export Ratio.
• Measures to Strengthen Stock Market.
• Ethic Binding Measures to Control Corruption.
• To start Technical Programs according to prevailing scope of the Industry.
• Ethic Binding Measures to Control 40% Un-Documented Economy.
• Decrease Cost of Production and Promote Ease of doing Business.
• To resolve the Issues of Bad Governance and Reduce the Harassment of Bureaucracy.
• To Reduce the Issues of General Public and to Take Confidence Building Measures for Larger Public Interest.
• To Take Specific Focus on Textile Industry and General Promotion of Cottage Industry.
• To Control Inflation of Consumer Price Index to Increase Aggregate Consumption to Encourage Aggregate Domestic Investment.

HIGHLIGHTS of Flood Losses And Need To Immediately Negotiate With IMF
• The irresistible floods have destroyed different crops including cash crops upon more than 4 million acre of land all over Pakistan and 40 million people have been badly affected by the floods. The number of destroyed houses doubled since last week to over 436,000, with Sindh, Balochistan and Khyber Pakhtunkhwa provinces most affected. Eight more districts declared ‘calamity hit’ by the Government of Pakistan, bringing the total to 80 districts in five provinces. Some 2000 km of roads have damaged or destroyed in Khyber Pakhtunkhwa. High flood risks remain along parts of the Indus River, notably between Taunsa in Punjab and Kotri in Sindh.
• Different epidemic diseases like Corona virus, Dengue, Diarrhea, and other chronic diseases have broken out in flood affected areas against which huge medicines and vaccinations are immediately required to cater for epidemics control.
• Humanitarian appeal for US$160.3 million to aid and protect 5.2 million flood affected people launched on 30 August, drawing encouraging response from donor countries, but it is not as sufficient to fulfill our need of colossal assistance.
• The country is facing with apprehensions of stagflation which means that inflation and unemployment will increase parallel and causing economic recession and this is very alarming threat to our economy.

This is high time; the government must immediately chalk out holistic strategy and take drastic measures to initiate negotiation with IMF to get a comprehensive bailout package for revival and rehabilitation of the economy. An empowered delegation for negotiation is proposed to be constituted to stave off a possible balance of payment crisis, and this high profile delegate will comprise high profile expertise from Finance Ministry, FBR, Planning Commission, and Renowned Entrepreneurs representing the capable expertise of the country. This committee should be given full mandate to negotiate with IMF.

Prior to initiate negotiation, the delegate will conduct a series of frequent meetings and chalk out all inclusive criteria of negotiation and prepare comprehensive recommendations for proposed bailout plan upon which negotiation will be taken up, followed with unprecedented efforts to achieve the goals and targets. This may be a way forward we can rationalize the utility bills and petroleum prices to reduce costs of production to accelerate exports and get Pakistan rescued from immediate economic irritations and then move forward to sustainable economic development.