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Setback to the economy: Islamabad ‘carnival’ — an expensive exercise - Pakistan - DAWN.COM
Setback to the economy: Islamabad ‘carnival’ — an expensive exercise
By Afshan Subohi
Updated about 2 hours ago
THE high-pitched political drama has kept the nation on tenterhooks. The round-the-clock TV and social media coverage has brought the camping episode of the PTI and PAT protesters under public scrutiny like never before.
The protest — which sometimes looks like a carnival, complete with music and fun activities — appears to be an expensive exercise.
So far, the short-term financial cost on account of the political flux is projected to be Rs800bn — Rs300bn in capital market and Rs500bn because of the rupee’s depreciation (which increases the debt volume and leads to shortfall in trade and investment).
The spending on protests so far is projected to be Rs500m. The economic cost in terms of a general business slowdown and the affect on future investment prospects are said to be huge and difficult to quantify.
There is no indication so far of the public responding to the call of civil disobedience. According to some analysts, it did give currency to an idea that can widen the wedge between the government and the people.
“All other deficits [current account, trade] are compounded by the trust deficit. The low credibility of the government is reflected in the low [under 10pc] tax-to-GDP ratio,” commented one expert.
“The damage to the economy and Pakistan’s image is irreparable. What we built over a year, have been lost in days,” Commerce Minister Khurram Dastagir Khan said, while referring to the country’s economic credibility abroad. He was talking to Dawn over phone from Islamabad, and did not sound too optimistic over the resolution of the crisis any time soon.
Khan mentioned recent decisions by Moody’s and other risk assessment companies, which improved the sovereign rating from negative to positive. “Economic consolidation is intractably linked to democratic consolidation in the country,” the federal minister stressed.
He admitted that a serious effort to assess the cost of the protest has not been undertaken so far, but promised to create a cell in his ministry to start work on the subject. “Till we conduct a detailed exercise, it is difficult for me to quantify the loss to the economy.”
Some business houses of Punjab, however, insist that the movement poses no danger to the democratic order and aims to improve the contents of democracy. Bitterly critical of Nawaz Sharif and his coterie, they argue that the Sharif brothers needed a jolt to become receptive and accommodating.
“When the parliament becomes pliant, a display of street power to wake up the leadership from its slumber becomes necessary. The political class needs to stop scaring the nation of a ‘military takeover’,” a top tycoon asserted.
“All investments in the pipeline will be halted at least for the next six months as investors wait and weigh their options all over again,” a former OICCI president commented.
“We are long-term positive, but there is little adverse impact in the short-term, as some overseas business visitors have cancelled their travel plans to the country,” said Humayun Bashir, former president of the American Business Council of Pakistan.
A senior economist who has served in key positions in the country expressed frustration over the ‘short-sightedness’ of the PTI and PAT leaderships. “There will be an impact on the level of debt and on the quantum of debt servicing, tax-to-GDP ratio and public borrowing, besides stagnation in export earnings and a fall in technology transfer. The challenges are too big, and the opportunistic elements are ready to throw the baby with the bathwater,” he said.
“If the current crisis is a reflection of the fissures among the civilian elite of Punjab, it is a phenomenon worth exploring,” an enlightened member of the Pakistan Peoples Party’s economic team pondered.
“It is pleasantly surprising how all political parties closed their ranks to resist any attempt to derail the system. The organised segments of the civil society, the lawyers and journalist bodies have come out openly in the support of parliament. We wish and hope that better sense prevails and the issues are resolved on the negotiating table, and not on blood-stained streets,” he said.
“The fear of instability dampens investment prospects. While investors can discount other shortcomings, uncertainty in a country where the institutional base is weak is struck out of the possible location list,” said a business leader.
Media reports have so far not focused on the cost of the rallies. In 2007, a newspaper report estimated Rs300m as the cost of Benazir Bhutto’s arrival rally on October 18.
Currently in Islamabad, the average minimum cost works out at Rs500 per protestor per day. This includes everything from food to transport to other logistics such as light, sound system, cranes, flags and banners, chairs, etc. About 800 buses and wagons, at an average rent of Rs10,000 a day, are said to be parked in Islamabad since the arrival of the two marches on August 15.
According to one estimate, about 200 degs of food of Rs5,000 each are supplied thrice a day at the venue. There are two cranes available to move the containers. A few dozen trucks are mounted with generators and fitted with floodlights. Two containers with 24 mobile toilets move with the protestors. There are some AC-fitted luxury containers for the leaders, and some more to serve as a stage.
According to avaiilable information, all five and four star hotels are booked to capacity in the capital. Vendors selling snacks and soft drinks near the venue of the protests are said to be doing roaring business.
When approached PAT and PTI leaders said private and party resources were pooled to cover the expenses.
Conservative estimates put spending by the two parties occupying the D Block at Rs20m a day. In two weeks since the start of the march, the parties and workers are believed to have collectively spent nothing less than Rs500m.
Published in Dawn, Economic & Business, August 25th, 2014
