Pakistan: Celebrating a crumbling economy

With 78% of the population living below the poverty line, 66% facing food insecurity, almost 100 million without access to safe water and just under 94 million without access to adequate sanitation, for most sensible people, Pakistan’s 2015-16 budget should present a huge problem for leaders of the country.

Nonetheless, the ruling classes are only able to multiply misery for generations to come. Moreover, this enforced misery of the many takes place alongside the shameless flaunting of wealth by the upper strata of the military and civilian elite. This accumulation through crime and corruption has allowed much of the wealthy class to construct palatial houses in their pristine, separate neighbourhoods or fund lavish shopping sprees in their temples of consumption across the world. Whilst the majority of the country lives in despair, not sure of where the next meal is to come from, a tiny minority live in gaudy bubbles, separated from the rest of the country.

Amongst the serious bourgeois, however, there are worries of an impending catastrophe. The rotten capitalist system has created its own problems, with the disastrous economic situation and the rising anger that this has engendered.

The naked economic offensive unleashed by the pro-market Pakistan Muslim League (N) regime is starkly evident, even with a glance at the official figures from the Pakistan Bureau of Statistics. Moreover, these statistics are produced by a faltering state, which has failed to even carry out a national census since the early 1990s and so must be read with a pinch of salt. It is telling, therefore, that even these statistics are still indicative of the exploitative class nature of the regime. This is a country where, on the one hand, both the tax to GDP ratio and the percentage of income tax payers is one of the lowest in the world but, on the other hand, indirect taxation on the masses has increasingly been covertly increased whilst the government falls over itself to offer massive tax incentives to imperialist and corporate vultures. Additionally, whilst the state has seen a withdrawal of SRO’s worth Rs. 103 billion, the ruling class still managed to extract Rs. 665 billion from the national exchequer in the last fiscal year; an increase of Rs. 187.9 over 2013/14.

In a frantic attempt to cover up these mounting deficits, the state is relying on reckless borrowing. The Pakistan Economic Survey reports that public debt has soared to Rs. 16.94 trillion; an increase of Rs. 940 billion in just the first nine months of the current financial year. As of March 2015, the total debt liabilities of the country stood at Rs. 19.3 trillion, whilst the debt liability of each person has increased from Rs. 37,170 in 2008 to Rs. 101,338 in 2015. Additionally, the external debt servicing has reached close to $7 billion in the fiscal year 2014, which amounts to almost 50% of the current reserves of the State Bank of Pakistan. In the fiscal year of 2015, the country paid $6.82 billion in debt servicing, with $5.91 billion as a principal amount and $915 million in interest payments. What this means is that, worryingly, 47% of whatever the government generates in revenue goes to paying off debt; an increase of 3% compared to the previous year.

The mounting debt burden, when considered alongside the ever-increasing defence expenditure, has a huge impact on the quality of life of ordinary people in Pakistan; there is very little left for social spending. Pakistan spends just 2% of its GDP on education and 2.6% on health, which is the lowest in South Asia. Should it really come as a surprise, therefore, that Pakistan accounts for one out of every ten children of primary school age who are not in school?

For the serious bourgeois, yet further unfortunate news comes from the fact that the unemployment rate has risen to 8.3% in the 2015 fiscal year, the highest it has been for 13 years. Unemployment has risen for each of the Nawaz administration’s two years in office, an increase of 1.5 million since it came to power in 2013.

According to the Pakistan Bureau of Statistics, a major reason behind the growing unemployment is insufficient economic growth. Whilst the level of unemployment is expected to rise by another 400,000 to 8.6% in the next fiscal year, this estimation could well be lower than the actual rate of unemployment if the government misses its growth target of 5.5%. Given the fact that, in the current fiscal year, the government has struggled to produce even a 0.24% increase in the growth rate and another 700,000 people were added to the pool of unemployed, it seems that it could well be the case that the original estimation will be less than what actually transpires.

According to various independent bourgeois and NGO economic experts, Pakistan needs an annual growth rate of at least 7% to create enough jobs to absorb new entrants in to the labour market. However, even Ahsan Iqbal, the federal minister for planning and development, has argued that the finance ministry’s projection of the creation of 2.5 million jobs during the next financial year is unrealistic.

Even from the point of view of capitalist macroeconomics, the prospects of higher and sustainable growth are bleak. All the parties in the incumbent political circus view the recipe for economic growth and employment generation to be based upon Foreign Direct Investment (FDI). How ignorant these masters of our destiny are! Is this nothing more than a blatant confession of the failure to build a modern industrial nation state? For more than a decade the mode of this FDI has been radically altered from a labour-intensive, to a capital-intensive approach. Rather than creating jobs, these imperialists and national corporate capitalists are destroying them in a mindless race for more profits.

Since the financial crash of 2008, the world capitalist economy has failed to recover and investment rates have nose-dived across the world. The falling rate of profit has long constricted investment in manufacturing and is now providing difficulties for investment in services. It is in this context that the regime is carrying out its privatisation plans, dealing a disastrous blow to the exchequer due to the fact that this process essentially amounts to the loot of national assets. The government generated a pathetic Rs. 170 billion from privatisation in the previous fiscal year; a level below even its own lowly target of Rs. 198 billion.

Both the state and the system are lurching towards disintegration and decay. In the context of international capitalism, there is no light at the end of the tunnel. With rapidly rising poverty and deprivation, life for the masses is becoming intolerably hellish and agonising. At the same time, the parade of wealth by the reactionary upstarts and crooks is instilling hatred and seething revolt amongst the oppressed.

They have no choice but to overthrow this system for survival.