POREG VIEW: These are undoubtedly bad days for President Asif Ali Zardari and his Prime Minister Syed Yousuf Gilani. Their efforts to levy additional taxes as directed by the Brettonwood twins have come to naught. Inflation is soaring and is presently hovering 16 per cent at the retail level. Every daily necessity is in short supply. The sweetener of everyone’s choice, sugar, refuses to be within everyone’s reach with the price quoted at around Rs. 90 this week end.
Now comes the report – a by-lined one in the News that Rs. 60 bn has been withdrawn as public trust in the government has plummeted. The correspondent Syed Minhaj-ur-Rab writes that because of the rapidly deteriorating public interest and confidence, the withdrawals are far more than investments taking place. Investments of over Rs32.35 billion were withdrawn from the Defence Savings Certificates (DSC) scheme in October 2009. During 2007-8 and 2009-10, in the tenure of the present government, there had been withdrawals to the tune of Rs64.11 billion from the Defence Savings Scheme alone.
“Economic experts enumerate a number of reasons for the flight of investment, the prominent being lack of public confidence. It includes ever-increasing corruption in the country and rising inflation. The electricity tariff is increased every day while unemployment is multiplying…”, the despatch says.
Power arrears have snowballed to a whopping Rs127 billion in less than 19 months- a clear reflection of how inefficient and incompetent the Water and Power Ministry is.
As pointed out at the outset, these are bad days for Zardari government. Troubles always come as wave after wave of floods during the monsoon. Consider the report for instance. Moody’s has downgraded by one notch the global local-currency (GLC) deposit ratings and standalone bank financial strength ratings (BFSRs) of five Pakistani banks.
The move is a sequel to the banks’ growing exposure to (B3 rated) Pakistan government securities and government-related lending, ‘as a consequence of limited private sector lending opportunities within the country’s deteriorating macroeconomic conditions’.
Moody’s estimated that as of end-June 2010, the rated Pakistani banks’ total exposure to sovereign-related risk assets had reached 38% of their total assets, from 24% in 2008. This has raised the banking system’s susceptibility to event risk at the B3 sovereign level. It also highlights the limitations in depth and diversification of the country’s banking system. All this in the short run could challenge solvency levels.
The country is facing its worst industrial downfall in its history, says the Karachi Chamber of Commerce and Industry (KCCI) which represents over 17000 entrepreneurs, big and small, across the country.
“The energy crisis, bad law and order situation, promotion of Bhatta (extortion) culture and increase in the production cost had led to the closure of at least one industrial unit in the commercial hub of the country daily”, it said in a recent report. “On an average, 316 industrial units were closed every year for the last several years. The average figure of industrial units closed per month is 26, leading to unemployment of 500 persons per unit on an average”.
KCCI Senior Vice President Talat Mahmood told The News that they had compiled the report on the basis of reports prepared by the Ministry of Industries and Production.
Is there anyone out there in Islamabad and Rawalpindi worried about the situation that is steadily going out of control?
