The Finance Ministry submitted a written reply in the Senate in response to questions about the future outlook of the economy as result of the prevailing unforeseen pandemic. The response of the ministry that controls the national purse is worrying. As per the assessment of Finance Ministry, the coronavirus pandemic will take a high tool in terms of mass unemployment and bulged fiscal deficit. Around three million jobs are expected to be lost. The industrial sector will lay off one million workers and the service sector will terminate two million employees.
A comprehensive report of Pakistan Institute of Development Economists (PIDE) tells that in all 18 million jobs will be lost in the agriculture, industrial and service sectors. The analysis of Finance Ministry and the evaluation of PIDE amply explain as to why the Prime Minster was averse to exercising the option of total lockdown which had been demanded by the opposition leader Shabaz Sharif on return to Pakistan from his month long stay abroad.
The lingering issue of surging unemployment was left as legacy by the last PML-N government because of its lopsided development priorities of giving preference to non-productive grandiose mega projects and creating depressed economic environment for fresh investment in large scale and, medium scale manufacturing with regressive tax and duties regime along with allowing high electricity tariff to private sector power producers. The is why extremely low interest rate did not encourage both local and foreign entrepreneurs to make new investment, although former Panning Minister Ahsan Iqbal had made a claim of turning the country into an investment heaven. On the contrary, foreign direct investment had fallen to $750 in the fiscal year 2018-19. According to conservative estimates, the rate of unemployment had gone up to 5.8 percent of the working forces.
The inherited macroeconomic imbalances of swollen current account deficit, unsustainable public debt and mounting fiscal deficit compelled the present government to go for frontloaded bailout package of the International Monetary Fund (IMF) worth $6 billion. The economy stabalisation measures such as restrictive import policy, currency devaluation and hiking interest rate resulted in decline in economic activities. –GT
