Talking Points: ‘Why Pakistan’s Economy Keeps Collapsing’

Irshad Salim, Karachi: My take on the vlog shared by a member at the Back2School WhatsApp Forum:

–Seeking monies (aids, grants, support funds, etc.) due to being located on the confluence of grostrategic faultlines of the region.

–If the above is not enough, going for IMF bailouts (loans)–to cover State/Govt expenses and the national composite national revenues gap.

–Absent capabilities & competency to pay back loans and the presence of apathy to create savings, the society has been treated as the net prime-ultimate source for returning loans thru consumerism spending mantra launched in the early 90s.

–The more they spend, the more sales tax, etc. can be collected. The easy way out is by importing and establishing imports based revenues streams from the society.

–The balance of payment issue is managed thru push for remittances from overseas Pakistanis instead of “imports should pay for exports” basis.

–Amidst “undocumented-cash-based-ask-no-receipts-give-no-receipts” culture, the public at large in general are at the mercy of predatory practices.

–These predatory practices have led to the State also being unable to efficiently collect sales tax (one example) and encourage business taxes (second example).

–The documented one’s (salaried community) faces double-barrelled-gun: direct taxes and inflation).

–Non-institutional (undocumented) inflation therefore match or exceeds institutional inflation (example: cost of borrowing from local formal loans & credit sources.)

–This leads to acceleration of middleman and local investors galore. The swings and hikes in daily essential prices and housing is just one example.

–Accumulation of wealth and opportunities to further play with it is reflected in the highs and lows of the Stock Exchanges (one example).

–Another is the real estate playing field, where investors/sellers dictate terms–first time home buyers are also treated same way as an investor buyer is treated.

–The salaried class, the consumers, and the first-time home buyers–all three of them comprise a huge community at the mercy of predatory practices.

–The “battle of wits” exercise appears to have been replaced with “battle for survival” battle-cry.