Pakistan's biggest problem: lack of good governance

The matter of grave concern is that Pakistan suffers from three deficits: 1) budget deficit, 2) trade deficit and 3) trust deficit. Though we have listed trust deficit on number three, may economic analysts term it ‘mother of all evils’. The public trust in the ruling regime is at the lowest ebb. That is the reason Pakistan’s GDP growth rate has been hovering around 3 percent for years.

According to the experts the GDP growth rate is low because new investment is scanty, balancing, modernization and replacements are virtually nonexistent. To be honest the existing units face declining capacity utilization, which is leading to closure of the productive facilities.

The ruling regime often take pride in saying, ‘Pakistan is one of the best performing market’. The reality is around 500 companies are listed at the local stock exchange and only a small number of new companies listed is the last one decade. Banks are thriving because of huge investment in the government securities, exploration and production companies make fortune due to high international prices of crude oil, fertilizer plants are working below optimum capacity utilization, country imports huge quantity of refined products because of dismal capacity utilization and the list can continue.

To overcome budget the government has imposed huge taxes on each and every product, including lifesaving drugs and food items. Imposition of petroleum development levy increases power generation cost as well as transportation and logistics cost. High electricity and gas tariff encourage theft, which is evident from ballooning circular debt.

Over the last three years no effort has been made to contain expenditures, which prompts the government to borrow more, to be honest the government borrows to pay off the debt.

To conclude the government is creating new entities, which promise bringing in huge investment. One fails to understand if the existing industries are closing, local entrepreneurs and educated people are leaving the country, why should foreigners select Pakistan as an investment destination? The rulers must remember actions talk louder than words.