Pakistan Economy Watch (PEW)

Masses, traders pinning high hopes on Freedom March: PEW

The Pakistan Economy Watch (PEW) on Sunday said the masses and business community has pinned high hopes on the JUI-F led anti-government “Freedom March”.

The masses and business community distressed due to high inflation, surging unemployment, and other issues are hoping relief in the aftermath of the protest, it said.

Masses and the business community has run out of patience as the failures of the government on all the fronts and economic stagnation has left them confused and upset, said Dr. Murtaza Mughal, President PEW.

Masses think that they have been cheated in the name of a change and now the only way to get relief is through agitation, he added.

Dr. Murtaza Mughal said that the recent wave of popularity of PML-N is not due to the efforts of leaders of the part but the blunders of the current government which has made life very difficult for everyone.

He noted that now politicians are being pushed to the wall on unwise changes while those holding important offices are busy in adding fuel to the fire.

Investors are facing uncertainty while the traders are on the streets protesting against taxation measures.

A large number of traders believe that the government should first target the wealthy industrialists and landed nobility before pursuing them which will leave them with no option but to pay their taxes honestly.

The protest is likely to be a major showdown between the Government and the opposition.

Promoting sugarcane crop on the cost of cotton criticised: PEW

Wrong policy can result in serious national security issues

Pakistan cannot afford reduction in textile income

Sugar mafia digging grave of economy for profits

The Pakistan Economy Watch (PEW) on Saturday said the policy of promoting sugarcane crop on the cost of the cotton crop should be stopped as it can result in serious national security issues.

Sugar mafia is digging the grave of the economy for profits which should be noticed and corrective measures should be taken, it said.

The influential sugar mafia has forced masses to buy the world’s costliest sugar but it has not satisfied their appetite for profit which is damaging the troubled textile sector, said Dr. Murtaza Mughal, President PEW.

Sugar mills are in surplus in Pakistan and billions are spent every year on subsidies to export additional sugar but at the same time illegal expansion in the capacity of some sugar mills continues with officials turning a blind eye towards it, he said.

On the other hand, the textile sector which is providing over ten million jobs and earning almost 13 billion dollars of foreign exchange for the country has been allowed to deteriorate to profit the sugar sector which is a liability, he added.

Dr. Murtaza Mughal said that the area under cultivation of cotton is reducing rapidly in favour of the sugarcane crop which will require 1.5 billion dollars of cotton imports soon that will hit forex reserves, production and exports as the cost of doing business will increase for millers.

The area under cultivation for cotton has been reduced by 29 percent while that of sugarcane has increased by 45 percent which has also damaged some other crops, he said, adding that why a crop is promoted which is a burden on masses.

He said that the government has also imposed a 40 percent customs duty on import of sugar to promote local sugar barons otherwise masses can get the commodity on half the price of the local market.

Dr. Mughal said that middlemen have also become a threat to the troubled textile sector as they buy it on throwaway prices from farmers and sell it on unbelievable prices which should be controlled as Pakistan cannot afford a reduction in income coming from the textile sector.

Serious gas crisis can engulf the country: PEW

Sale of LNG-based power plants may pose a challenge

The Pakistan Economy Watch (PEW) on Sunday said the crisis-like situation can emerge in the gas sector during winter which will be more serious than the last year’s crisis.

A crisis can engulf the country in the biting winter as the production of local gas continues to fall, the LNG sector is riddled with inefficiency while both the gas utilities are not prepared to face the challenge, it said.

The consumption of LNG which is five-time costly than the local gas continues to increase as the government has not materialized import of cheap gas from Iran or Turkmenistan, said Dr. Murtaza Mughal, President PEW.

He said that last year domestic consumers were burdened with Rs 29 billion by the gas companies and this year the burden has been estimated to be Rs55 billion due to the shortage of buyers of costly imported gas.

Murtaza Mughal said that there is a lot of focus on constructing terminals but there is a lack of buyers in the market for which domestic consumers are made to pay.

He noted that gas was a little over 50 percent of the national energy mix which has now receded to 35 percent while the share of LNG has increased from zero percent in 2914 to 5.6 percent in 2017 and it will be almost fifty percent in a few years.

The government is set to sell two LNG-based power plants in Punjab at the cost of $3 billion as per the agreement with the IMF. Caution is required in the deal to sell 2640 megawatt power plants, big consumers of LNG, as a little mistake in the deal can leave all the companies dealing in the LNG supply chain bankrupt, he warned.

Achieving economic stability amid increasing poverty an illusion: PEW

Eroded buying power of masses hurting the economy

The Pakistan Economy Watch (PEW) on Friday said achieving economic stability amid increasing poverty in the country is a delusion of policymakers.

Reduced buying power of the masses due to increasing poverty is resulting in economic problems which are against the interests of country and people, it said.

Tax measures and increased cost of energy has swept the buying power of masses, therefore, the majority has stopped buying anything except necessities which has clipped demand, said Dr. Murtaza Mughal, President PEW.

He said that reduced demand has brought down the production of factories resulting in layoffs which have thrown millions in unemployment.

Dr Murtaza Mughal said that Pakistani industry relies on the local market is exports of 300 billion dollar economy is just 19 billion dollars.

The agriculture, industry, and the services sector depends on the local market which is in bad shape due to policies of IMF which will push the country to seek another package sooner than expected.

He noted that current interest rates are higher enough to crowd out the private sector as it is only benefitting the commercial banks and the government which it has broken the back of other sectors.

The higher cost of credit can have a detrimental impact on private investment and lower rates boost it, he added.

Current interest rates and set of policies are enough to shatter economic beyond repair, therefore, it should be revisited immediately, he demanded.

Govt shouldn’t keep the benefit of reduced oil prices to itself: PEW

Govt asked to pass on benefit of reduced oil prices to people
Increasing tariff twice in two days shows panic in power sector
Masses facing unprecedented inflation should be given relief
The Pakistan Economy Watch (PEW) on Sunday said the government should not pocket benefit of reduced oil prices in the international market and pass on relief to the masses.
The masses facing an unprecedented price hike deserve some relief, therefore, petroleum prices should be reduced in line with the recommendations of OGRA, it said.
Every government claims that oil prices are linked to the international market but when prices slide the benefit is not passed on to the masses. Rather, the government silently increases levy which keeps prices intact but increase the income of the government, said Dr. Murtaza Mughal, President PEW.
Oil prices are coming down but the government increased electricity tariff twice in two days putting additional burden of around Rs 125 billion on masses which is amazing, he said.
Dr. Murtaza Mughal said that the electricity sector will continue to show heavy losses even if the price of electricity is doubled because it is infected with corruption and inefficiency while the government seems not interested in reforms.
No steps have been taken to contain corruption or losses in the power sector while privatization of the ailing power sector is not a priority for the government, he added.
He noted that circular debt is the outcome of incompetence and corruption in the power sector while the government finds it easy to finance the power sector mismanagement by putting the burden on the masses.
Actual line losses in the power sector came in at 18.3 percent for which honest consumers who are paying their bills regularly are penalized.
Click here to View Printed Statement