Financing risk
IT is a sign of how the world has been turned upside down when a credit risk monitoring service like Moody’s first notes that Pakistan’s fiscal deficit is set to rise to almost 10pc of GDP by the end of this fiscal year, but due to substantial external support that is coming, the financing risk associated with the state has actually decreased. In a statement released on Thursday, Moody’s said that “substantial financial support from official-sector creditors reduces Pakistan’s financing risks” and added that the debt-to-GDP ratio will climb to 87pc by June, up from 83pc last year. The IMF has forecast that Pakistan’s debt to GDP will climb to 90pc by contrast. Either way, it is important to note that debt will be rising sharply in the immediate term, as will the fiscal deficit, while external support will cushion any adverse impact this might have on the country’s financials, especially where reserves are concerned.
It is important to be careful when taking stock of this situation because it is easy to see in it cause for celebration. External support is indeed valuable in providing the country with a much-needed cushion to free up resources for the intensifying Covid-19 fight that lies ahead. But there are echoes of previous times that are advising caution as well. Pakistan has repeatedly been through cycles where external support, particularly of the sort that raises the overall debt levels of the country, has furnished fiscal space, and the situation encouraged a certain profligacy and carelessness in how the borrowed resources were handled. It also sparked a tendency among those in power to think that it was their superior management acumen that had opened up this fiscal space.
We now run the risk of falling prey to both tendencies one more time. The government is surrounded by vested interests at the moment demanding tax breaks as well as special incentives to help them weather the lockdowns. Many of these same vested interests are promising that they will not lay off workers during the period their operations are shut, though reports are coming in that this commitment is being breached in many cases. The temptation at a time like this to use all the additional space that is opening up to throw goodies to the billionaires, in the name of reviving growth, bringing in foreign exchange or promoting employment, will be powerful. But it is critical that this temptation be resisted. All the resources of the state must be focused first and foremost on two priorities: helping the poor directly through enhanced social-protection programmes, and ramping up the health sector to meet the challenge. Pakistan’s history testifies clearly that in times such as these, vested interests easily hijack the national agenda. That history must not be allowed to repeat itself.
Ramazan prices
WITH the arrival of the fasting month of Ramazan, many a greedy trader in this country will be licking his lips at the prospect of making obscene profits. While the Ramazan price spiral has become an unfortunate annual feature of life in Pakistan, this year, due to the coronavirus and the ensuing lockdowns, a large number of people will find it harder to put food on the iftar table due to the depressing economic situation. As reported in this paper on Friday, vegetable and fruit retailers have jacked up the prices of their produce in Karachi in the run-up to the holy month to make windfall profits. While wholesalers had already increased prices by 20pc to 25pc, many retailers are now charging double the wholesale rates, knowing that fruit is a popular choice during iftar, while vegetables are also essential to the Ramazan spread. Moreover, as bachat bazaars will not be set up this year due to the Covid-19 situation, people will have little choice where shopping for kitchen essentials is concerned, other than the open market.
The state’s price monitoring and control mechanism has been feeble in the best of times. But in periods of such crises, effective controls need to be in place to ensure unscrupulous traders are not exploiting the people. Due to the pandemic, with businesses shuttered and the economy battered, the people’s buying power has been severely curtailed. The government has tried to address the situation through Ehsaas payments, while both the state and NGOs have been distributing rations. But despite these interventions, for many middle-class and working people the struggle for survival and providing the bare necessities for their families has become even more difficult. The state must ensure that profiteers, hoarders and other negative forces in the market do not add to the people’s miseries during Ramazan, especially in such trying times, by charging prices at will. Regular inspections of markets need to be carried out to ensure that traders are charging notified prices, and that the goods available are of a quality fit for human consumption. Controlling the negative, exploitative forces of the market is indeed a national and ongoing challenge. But during Ramazan families come together at the iftar table to share small blessings in these times of depression and uncertainty. Greedy market forces must not be allowed to snatch these simple joys from people by charging exorbitant rates for produce, foodstuff and kitchen essentials.
Criminalising match-fixing
THE Pakistan Cricket Board’s plans to criminalise match-fixing has been widely hailed. The menace took root in Pakistan cricket during the early 1990s and has since been witnessed in several match-fixing and spot-fixing cases involving dozens of cricketers. That has not only blighted the game’s credibility but also sullied the country’s image. Brilliant players such as Salim Malik, Salman Butt, Mohammad Amir, Mohammad Asif, Nasir Jamshed and others have fallen prey to the fixing menace and have been given harsh punishments. However, there have been scores of fixing incidents involving players, both at the domestic and international levels, who have escaped penalties, primarily due to want of evidence and lack of witnesses. PCB chairman Ehsan Mani has admitted that the board does not currently have the legal authority to tackle match-fixing while it is beyond its resources to follow the money trail every time such a case is reported. The PCB, he says, is left with no choice but to make match-fixing a criminal offence, as done by New Zealand, Australia and Sri Lanka over the years.
It is, indeed, a welcome move on the PCB’s part. But having said that, many former players and critics have rightly expressed reservations. They ask if the PCB will bring all culprits to book, or pick and choose, as done previously, allowing the big fish to dodge the net. It is no secret that Pakistan’s much-trumpeted inquiry into match-fixing in 2000 by the Justice Qayyum Commission spared many a fixing culprit, letting them get away with a note of reprimand and a fine, and handing a life ban to just one player, batsman Salim Malik. Such cosmetic actions for a major offence like match-fixing are lamentable, and have done little to curb the menace or discourage players; they have, in fact, resulted in repeated incidents of match-fixing in Pakistan cricket. The PCB would be well advised to approach the government for criminalising match-fixing so that the despicable practice ends once and for all.