Points to Ponder August 2023!

IMF Conditionalities – the suffering of the people!

The impacts of the IMF conditionalities set in its Standby Agreement that was signed last month have become glaringly visible in this month, and strikes, street protests and rallies have been held across the country. In Kamoke, and many others areas in Punjab, people burnt their electricity bills raising slogans against the extreme hike in utility bills refusing to pay what they cannot afford. The situation was so volatile that in Islamabad, the Islamabad Electricity Supply Company, Iesco asked for police protection from consumers protesting inflated electricity bills.

Businesses represented by Karachi Chamber of Commerce & Industry (KCCI) and Businessmen Group have also strongly protested against the ‘unbearable’ escalation in electricity tariffs. These bills were deemed unaffordable by neither the common person, nor traders or small industrialists. However, the caretaker government which took over the running of the government on August 17, 2023, is unable to provide any relief to the people or industry given the conditionalities agreed upon with the IMF. According to the caretaker Finance Minister Dr Shamshad Akhtar Pakistan’s fiscal space did not allow any subsidy or relief. The message given was that electricity consumers need to ‘manage their expectations’ that had been raised by the caretaker Prime Minister Kakar. It was clear that the country’s governors had little space (and maybe even interest) to protect the interest of the people and the dictate of the neo-colonial rulers had to be towed.

There has also a sharp rise in water utility bills, and the Punjab government has notified more than 400 percent increase in water utility bills for five major cities of the province. Similarly, the prices of petrol and diesel have hit a record high; fuel prices have jumped by nearly PKR 40/litre in just 15 days. Business leaders have stated that rise in fuel prices will result in closure of 50 per cent of industrial units, and trigger mass unemployment. Trade and industry are already struggling to survive the power tariff hikes of almost PKR10/unit, and cannot bear the increase of PKR17.50 and PKR 20/litre in prices of petrol and diesel, respectively.

In Karachi, traders have launched the “livelihood protection movement” against the soaring petrol and electricity prices. At a traders’ convention representatives of over a dozen of trade bodies agreed to step up the movement to save their businesses.

Similar impact is being felt in agriculture and food production where high fuel prices have increased all associated costs in production including transport. Expensive chemical agriculture inputs are heavily impacted due to currency depreciation as well as fuel prices. According to the Sindh Abadgar Board (SAB), prices of agricultural inputs continued to rise; fertiliser price had increased by 15pc to 20pc over the last few months. The Sindh Chamber of Agriculture (SCA) demanded at least PKR450 per maund for sugarcane crop given the sharp increase in agriculture input costs. They have rejected PKR 425/40 kilograms of sugarcane that is being proposed by sugar mills. It was also pointed out that though the government has not raised gas price for the fertilizer industry, farmers are still being forced to pay a high price for fertilizer.

Some good news was a good cotton crop as the pest attacks remained insignificant, and it is expected that a high cotton production will save billions of US dollars in cotton imports. An agriculture think tank, Agriculture Republic has pointed out that the textile industrial have lagged behind in ensuring that farmers get a good price, such as PKR 8,500 per 40 kilograms of cotton.

Another welcome news was availability of sufficient water in water canals after recent rains across the country, which included water being released downstream in the Kotri Barrage as well. The country`s two major reservoirs Tarbela and Mangla are now almost full to capacity, turning into surplus the acute water shortage that marked beginning of the current Kharif season in April; it is expected that there is now sufficient water for this year as well as next year cropping season.

However, the feudal elite continue to amass irrigation water access for their own benefit. According to DAWN, farmers in the tail-end areas of Thatta district have unearthed numerous illegal cuts, outlets, barricades and pumping machines meant to block flow of Nari Chach (upper) irrigation channel to their areas. Farmers requesting anonymity as no doubt they feared the wrath of feudal power, claimed that the local irrigation officials and other employees were hand in glove with the influential landowners.

Inflation, measured by CPI, surged by 28.3 per cent in the first month of the current fiscal year mainly due to rising food and energy prices. Similarly, food inflation for July was 40.2pc and 41.3pc for urban and rural areas, respectively, whereas non-food inflation was 17.3pc in urban and 22pc in rural areas. Core inflation, which strips out food and energy, stood at 18.4pc in urban and 24.6pc in rural areas.

The rising hunger and poverty can be seen through reports on suicides that are being reported. In Mandi Bahauddin, a woman poisoned her three sons due to poverty, resulting in the death of two of them at the hospital, while the eldest one survived. A 28-year-old man hanged himself from a tree with a rope over poverty at in district Layyah. The man was the father of three girls and he was reportedly facing financial troubles. Police responded to a desperate call for help from a man at emergency 15 who told about hunger his family was going through for the last two days, warning of committing suicide. These tragic happenings are testimony to what the people are suffering.

While unable to provide relief to the people, the state is quite willing to take away livelihood and resources from the people. The Punjab Chief Secretary Zahid Zaman has once again directed deputy commissioners to launch an operation against the illegal occupation of state land and encroachments. The Punjab government, through its various operations has claimed to have identified hundreds of thousands of acres of illegally occupied land. So, while, hundreds of thousands of agriculture land is the property of very power feudal elite as well as the defense forces, the landless farmers are being pushed off land. That ‘might is right’ is very evident in the policy arena in Pakistan. That indeed just and equitable land reforms are not considered a policy option is quite clear.

Voices have been raised by a number of organizations against the state’s disregard for small and landless peasants including sharecroppers and agricultural workers in various agriculture, livestock and fisheries sector. Though various laws such as the Sindh Tenancy Act of 1955, Sindh Bonded Labour System (Abolition) Act of 2015, Sindh Agriculture Worker Women Act of 2019 and Sindh Industrial Relation Act of 2013 are present, they are not being implemented. A large majority of peasants, particularly sharecroppers and rural workers, especially women cotton pickers faced abject poverty, crippling debt bondage and persistent malnutrition, while landlords were pushing extra costs on the peasants that further result in hunger and poverty.

Loans and debts abound!

The above dismal situation is partly based on the debt-ridden situation of Pakistan. As of 31st March 2023, Pakistan’s total external public debt stood at $85.18 billion, with a reduction of $1.38 billion in total external public debt, as of December 2022.

The IMF stimulus package has resulted in inflows of foreign finance amounting to $5.1 billion in July. According to the finance ministry’s Economic Affairs Division, total foreign economic assistance received in July was $2.89 billion compared to $185.6 million of the same month last year, an increase of 1,454 per cent. This was in addition to $1.2 billion released by the International Monetary Fund on July 13 as the first tranche of the $3 billion Standby Arrangement (SBA) and $1bn by the United Arab Emirates. The bulk – $2bn — of foreign loans were from Saudi Arabia and a $508 million guaranteed loan to Pakistan Air Force by China National Aero-Technology Import and Export Corporation. The division said that out of the $2.89 billion inflows, the bulk of $2.08 billion were received for budgetary support or programme loans and about $640 million as project aid.

Further, according to the Economic Affairs Division the government of Pakistan signed new loan agreements worth $7.228 billion with development partners during the first three-quarters (July-March) of the fiscal year 2022-23, compared to $11.321 billion during the same period of 2021-22.

Out of the total external public debt of $85.18 billion, the government owed $64 billion to multilateral and bilateral development partners including IMF. Meaning, more than two-thirds (i.e. 75 percent) of the total external public debt is on concessional terms with a longer maturity, 16 percent (i.e. $13.5 billion) from international capital markets and foreign commercial banks, and seven percent (i.e. $7 billion) of the total external public debt constitutes deposits from friendly countries (China and Saudi Arabia).

The government paid an amount of $12.922 billion during the period July-March 2023 on account of debt servicing of external public loans. This consists of principal repayment of $10.835 billion and interest payments of $2.087 billion.

The above figures show the vast burden of debt that the country is under, and the impact of this callosal debt is borne by the people, that can be well seen under the conditionalities imposed by the IMF.

Wither Accountability?

According to the Asian Development Bank, soaring food and fuel prices and the coronavirus pandemic have pushed nearly 70 million more people in Asia into extreme poverty last year. This sentiment is also expressed by the Governor Jameel Ahmad, State Bank of Pakistan (SBP). According to him, the global economic conditions have largely contributed to higher inflation in Pakistan, and matters have exacerbated due to the floods in Pakistan. However, only floods have not resulted in the accumulation of such a massive debt and the blame has to be shared with one after the other incompetent governments run by elite classes of our country who have borrowed without showing any productive gain. One also needs to ask the lending institutions how they carry out their monitoring and evaluation? Accountability of the funds given and received seem to be totally lacking; while the elite, including bureaucracy continues to live with plenty, the poor are coerced to pay a debt they had no hand in incurring. Such are the results of so-called capitalist democracy, a system that is much sprouted for safeguarding human rights, women rights, the rights of the working class, peasants and minorities, among others.

The utter disregard for accountability is seen in the actions of an outgoing government. Just a day before its term reaching completion Economic Coordination Committee (ECC) of the Cabinet approved a huge number of programs and policies. A six-month extension of the Kissan Package worth PKR 158 billion was carried out. Also, a ‘single-entity’ export processing status to Frontier Works Organisation (FWO) in Waziristan for mineral exports and revival of modified SME Asaan Finance (SAAF) Scheme were granted as well as a ‘gradual sovereign guarantee’ for about $3.475 billion worth of Chinese loans for a 1,200MW nuclear power plant were given. The ECC also approved the continuation of gas supply to two Punjab based fertiliser plants of Fatima Group till Oct 15 and issuance of a ‘State Support Agreement’ to provide financing comfort to prospective foreign operator of Islamabad International Airport set to be outsourced shortly. Eight development projects worth PKR 174 billion were also approved that included a World Bank financed Punjab Urban Land Systems Enhancement Project of the Punjab Board of Revenue (BoR) worth PKR 26.44 billion. The Cabinet Committee on Inter-Governmental Commercial Transactions approved the outsourcing of the Bulk and General Terminal at Karachi Port, East Wharf, to Abu Dhabi Ports (ADP) for 15 years.

The rapid agreement on development projects, including selling off national assets and privatization schemes have once again happened without any consultation with the people, the working class. The All Pakistan Wapda Hydro Electric Workers Union (CBA) is questioning the federal government for not disclosing plans for privatisation; the facade of public-private partnership is being used for outsourcing feeders. The union officials have stated that they will stand up and fight the government’s policy of privatisation of power utilities.

The so-called democratic right to protest is not looked upon favorably by the Pakistan International Airlines (PIA) management and has lodged an FIR against its employees who were demanding askance at the proposed privatisation of the national flag carrier. It is indeed interesting that the common citizen is met with extreme resistance from the Police if she wants to lodge an FIR; however, it seems the PIA management has had to face no such difficulties. Such is the sorry tale of power and privilege in the country where the working class is criminalized for demanding rights, where the rich and the powerful run Scot free even in face of dire misdeeds.

The Persistent Mantra …trade liberalization in agriculture

In spite of the massive failing of neoliberalism in bringing prosperity to the country, our rulers continue to propagate the firm belief that they hold in the neoliberal capitalism and corporate control. According to Ms. Tanzila Umi Habiba, the Special Assistant to the Chief Minister, modernizing agriculture could help in overcoming food and economic crisis. Modernizing means linking agriculture with the information technology sector. Academia also believes that our youth bulge could avail career opportunities by participating in joint ventures in the IT and agriculture sectors; they could use their innovating ideas in areas such agri-business, smart agriculture, GIS, remote sensing, and agricultural monitoring.

The Punjab Agricultural Research Board (PARB) has approved research projects worth PKR 900 million that include development of superior canola quality lines in rapeseed and mustard; in the presence of the interim Agriculture Minister SM Tanveer, a board meeting approved 40 research plans — 31 relating to agriculture and nine pertaining to livestock. Rich landlords euphemistically called ‘progressive farmers’ have called for research on the horticulture sector so that Pakistan could also engage in exports in this sector.

National and international experts are advocating for establishment of joint forums that include national agricultural institutions, policymakers, and breeders for the improvement of the country’s livelihood and the food security. In context to seed, legislation and genetic inspection is being proposed to prevent defective seeds in the country and to certify imported seeds. Sindh Agriculture University (SAU) and Food and Agriculture Organization (FAO) have agreed to work together for strengthening research and development, on agriculture in Sindh and Balochistan to promote sustainable agriculture and improve living standards of the farming communities.

Similar emphasis is by various international development organizations. A high-profile event organized by FAO for a USAID-funded project “Livelihood and Food Security Improvement Activity” (LFSA), was attended by the Secretary Agriculture, KP, Director Generals and high-level government officials from agriculture research, extension, livestock and dairy development along with representatives from USAID, UN WOMEN and farmers’ representatives from Khyber and Mohmand districts. The project – a FAO collaboration with KP government, civil society organizations, the private sector will support 150,000 rural households including women farmers, over a period of four years. The aim is to improve livelihoods and food security of 150,000 households through agriculture-led growth in KP and flood-affected areas of Pakistan, adopting technological advancements for enhanced productivity and better livelihoods. The narrative is that the project will strengthen and modernize agriculture and livestock sectors, creating assets, and diversifying livelihood options.

Such ventures abound Pakistan’s development history, but to no avail. One is left to wonder how these projects are designed and evaluated that there is failure after failure in creating better standards of living among rural communities. All new projects have the same ambitions with no reflection on what they have failed to deliver in more than 70 years of pursuing development projects based on capitalist enterprise.

Institutions like the FAO, US AID among others who espouse neoliberalism, and industrialized chemical agriculture forget that such agriculture production systems are dependent on water which is now a highly scarce resource. According to the World Resource Institute, increased water demand is based on number of factors including industries, irrigated agriculture, livestock and energy production.

Pakistan has been classified under the ‘high’ water stress category. This categorisation is part of a broader revelation that by 2050, an estimated $70 trillion in GDP, equivalent to 31 per cent of the global GDP, will be vulnerable to high water stress. The world is facing an unprecedented water crisis, and the Water Risk Atlas finds that 25 countries, i.e. one-fourth of the world’s population face high water stress, annually. Given these circumstances, to invest in ventures that will require more and more modern industrial technology puts the entire planet at risk.

The new emphasis on livestock and dairy sector is blood-chilling as the context of Pure Food Laws in Pakistan is to wrest control over livestock and dairy from the hands of small and landless farmers, especially women farmers in compliance with the Sanitary and Phytosanitary Mechanisms of the World Trade Organization.

Trade – murky waters!

Trade liberalization has not been able to yield gainful results as yet as can be seen by the poor performance of Pakistan’s exports in the last fiscal year.

Reports on exports on the last fiscal year were made available this month in August, and the overall picture is quite dismal. In FY23, the merchandise exports dipped by 12.71 percent to $27.54 billion from $31.78 billion in FY22, missing the $32 billion target by a wide margin of $4.46 billion. The government has projected an export target of $30 billion for the current fiscal year. According to the Pakistan Bureau of Statistics, declining exports are aggravating fear about closure of industrial units, especially for clothing and textiles. However, apart from exports, imports also fell by 31 percent to $55.29 billion in FY23 from $80.13 billion in FY22. According to APTMA, textile exports in the period of January to July, 2023 stood at $9.09 billion, down by 21 percent as compared to export earnings $11.48 billion in the same period in 2022.

Similarly, rice export fell by 14 percent during the FY23 due to lower crop output from flooding. However, a positive outlook on rice exports in FY24 as a bumper crop is expected as well as a ban on rice exports by India.

Though Pakistan’s vegetable exports reached its highest peak yet at 1.336 million tonnes in FY23 from 939,714 tonnes in FY22, which was a 42 percent increase in export volume. However, it still failed to fetch higher foreign exchange earnings which went down by 3 per cent to $300 million in FY23 from $310m in FY22 mainly due to a drop in average per tonne price (APT) from $329 to $224.6.

It is indeed remarkable that as consumers at home faced high sugar prices, sugar exports rose to a 100 percent in the first month of the current fiscal year. According to news, the previous PDM government had allowed sugar exports in February at the behest of influential political families. It is also questionable that under heavy pressure on foreign exchange reserves, 574 tonnes of sugar has been imported in July, showing an increase of over 20pc on a year-on-year basis. Under these conditions, it may be worth examining how our neighboring country India has dealt with in trying to improve domestic availability. According to news reports, India intends banning sugar mills from exporting sugar from October 2023. It has also with immediate effect, imposed a 40% export duty on onion to help improve local supply to the Indian consumer.

However, on this side of the border, it is evident that there are efforts to increase agriculture exports. Pakistan held its 1st International Food and Agriculture Exhibition-FoodAg-2023, where more than $410 million of export deals were finalised in agro-rel­ated products along with the signing of 10 memorandum of understandings (MoUs).

Of Trade Partnerships . . .

A Chinese food firm, Litong Foods is aiming a joint venture worth $30 million with Pakistani Guard Agricultural Research and Services (Pvt.) Limited to export 5000 tons of dried chillies to China. Litong Foods and guard have already undertaken a project of sowing hybrid chilies in Multan, Punjab. Guard, in the past has also introduced Chinese long grain hybrid rice in Pakistan.

Pakis­tan and Iran have developed a five-year trade cooperation plan aimed at enhancing trade volume to $5 billion and to finalize a free trade agreement among the two countries, as well as the completion of the Pakistan-Iran gas pipeline. They also came to an agreement to set fishermen from the two countries free and waive off any fine imposed by authorities of both countries for the release of their vessels.

The remarks of the Ambassador of Iran to Pakistan Dr Reza Amiri Moghaddam on CPEC, Gwadar and Chahbahar Ports portray a greater relationship between the two countries as well as the trilateral relationship with China. According to him the two ports Gwardar and Chahbahar are interlinked in terms of commerce and development, and “there is no element of conflict.”

The inaugural shipment from China to Afghanistan via the Khunjerab border in Gilgit-Baltistan, under the Transports Internationaux Routiers (TIR) Convention has been undertaken; expectations are that transit route would significantly reduce travel time, almost by 70 per cent and cut logistics costs by 30pc. There are hopes that the shortened passage through TIR coupled with Quadrilateral Traffic in Transit Agreement — between China, Pakistan, Kyrgyzstan and Kazakhstan — including the Belt and Road Initiative will help Pakistan to become a major hub of transit trade.

Climate Imperialism!

After the devastating monster monsoons of last year, the country is once again facing impacts of the monsoon season this year. All major rivers of Punjab have swollen due to heavy rains in different parts of the province as well as other parts of the country.

The Sutlej and Chenab burst its banks, water inundating villages as well as agricultural land spreading over hundreds of acres. Areas in Bahawalpur, Okara, Vehari and Khanewal among others have been heavily impacted. Mudhouses collapsed leaving people once again without shelter. Flash floods in Balochistan left eleven people dead, as well as destruction of houses.

By the end of the month nearly 400,000 persons and 20,000 livestock had been shifted to safer locations. The ongoing floods triggered by monsoon resulted in the deaths of 213 people, injuring 313, destroying 5,754 houses and killing 1,256 livestock during the current rainy season that started on June 25, 2023. This catastrophe is in face of impacts still being felt from last year floods. According to UNICEF, there were still eight million people, around half of whom are children, who continue to live without access to safe water in flood-affected areas, whereas over 1.5 million children require life-saving nutrition interventions in the flood-affected districts.

On one hand the people are suffering from fossil fuel emissions of rich industrial countries, and on the other hand industrial practices have resulted in various forms of pollution. Government of Gilgit-Baltis­tan has made a much-needed decision to impose a complete ban on single-use plastic throughout the region; such a step needs to be taken across the country, as plastic pollution intensely harms all life forms including marine life, destroys agricultural production harming human health and the environment. Similar actions by the people internationally can also be seen. For instance, in Ecuador, the people have voted to stop an oil drilling project in an Amazon reserve.

According to an Air Quality Life Index report published by University of Chicago, air pollution in urban centers of Pakistan, such as in Lahore, Kasur, and Sheikapura could reduce at least four years of life expectancy. The report identifies that the entire 240 million population of Pakistan resides in regions where the yearly average of particulate pollution surpasses the guidelines set by the World Health Organization.

The disregard for the environment can be seen at the national and international level; Japan has now started releasing treated radioactive water in the Pacific Ocean from its damaged Fukushima power plant. In response China has announced a blanket ban on all aquatic products from Japan. However, this will not save marine ecosystem from harm.

It is interesting to see that for countries like the United States, who are basically largely accountable for fossil fuel emissions, their efforts are spent in trying not to bring about changes in their highly destructive production and consumption system but to find ways to clean up the emissions after they have been emitted. The US government has announced that it will spend up to $1.2 billion for two pioneering facilities to vacuum carbon out of the air. Similarly, a new Global Biodiversity Framework Fund has been created by the Global Environment Facility (GEF) to facilitate financing for developing countries to enhance their ability to protect, restore and ensure sustainable use of natural resources. It is again ironical that the countries that are responsible for destroying biodiversity in their own backyard as well as in our countries also create these grand funding schemes to save what they are willfully destroying. It is important to note that world temperature is constantly increasing. According to European Union climate observatory data, in the first week of August, the temperature of the oceans’ surface rose to 20.96 degree Celsius, rising from 20.95C in March 2016. This was a new temperature record, and could have further implications for the Earth climate, marine life and coastal communities.

The Right to Fight: Fight for our Rights!

The constant misery faced by the people on various fronts has resulted in an overall environment of confrontation in the country, with people standing up resisting the many forms of violations that they are facing at the hand of the governing elite. Flawed governance policies of Punjab Health Facilities Management Company (PHFMC) under the administrative control of Primary and Secondary Health Care Department (P&SHC) has led to closure of nearly 1,000 primary health units, with thousands of medical and paramedical staff going on strike demanding their rights. As is the norm, instead of their demands being addressed, they were given ‘warning letters’. Civil Aviation Authority (CAA) employees have also been holding demonstration at the Allama Iqbal International Airport, Lahore outsourcing of major airports of the country.

In Nagarparkar, Sindh, there have been protests against the Sindh government plans to auction off 5,000 acres in the Parkar region for granite extraction, while in Balochistan, hundreds of female students at a government college have been protesting against continued absence of teachers at the facility, that has left it basically non-functional.

Another dastardly incident was a mob attack on 19 churches in Jaranwala, Faisalabad based on information that two people had defile the Quran. Religious extremist reactions routinely end in death and destruction of minorities with state forces showing total failure to control such acts of vandalism. People across the country have stood up to call for the protection of religious minorities, including a Minority Rights March which held a candle vigil and protest in Karachi.

Given the wide scale of chaotic disruptions in socio-economic lives of the people, the way out of course is to demand for a change in our economic system. A system change is drastically needed that upholds basic principles of human rights, full fills basic needs such as food, water, health and shelter, and of course must include right to decent livelihood. Just and equitable distribution of resources will surely lead to a more humane society, cooling not only our overheated planet, but also bring relief and dignity in the lives of the human civilization, as well as living-beings.