W.11
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It is a toss-up between a rock and a hard place: lock down the country to prevent people from dying but by the time the virus is conquered the economy will be on the ventilator.
Governments around the world are looking to each other for economic strategy but for places like Pakistan, it is hard to say with absolute certainty if someone else’s formula will work. This is why there has been so much debate in Islamabad and the provincial capitals. Now there is talk of extending it to April 21 because provinces like Sindh fear a resurgence of coronavirus.
By this week Islamabad was giving out Rs12,000 per family under the Ehsaas Emergency Cash Assistance program which it will be able to manage for 12 million for four months with Rs144 billion.
Pakistan is set to receive $1.4 billion from the IMF next week. This emergency fund will help keep the economy afloat. The bad news is that the economic growth forecast has been revised down to 0.8% from 2.6% for the current fiscal year. Exports are expected to plunge 50%, according to the PM’s Advisor on Commerce Abdul Razzak Dawood in a Bloomberg survey.
The Pakistani rupee was one of the worst performing currencies in Asia and as much of the $3.4 billion invested in its short-term treasury bills were taken out by investors from March onwards. The rupee depreciated against the dollar after the greenback rose from Rs154 in early March to Rs169 before the central bank intervened and brought it down to Rs166.
The central bank has cut interest rates and announced several other measures to help businesses as well as workers.
SAMAA Money spoke to nine prominent business representatives and economy observers. Six out of them said industries should run partially with strict SOPs and endorsed the overall lockdown. Only one person, a big name in the stock market, said he did not agree with the lockdown and one other felt it was a necessary evil but that government needed to be giving out one uniform message.
This is what they said:
Kaiser Bengali, economist
He thinks we can save the economy after we save lives but he cautions that given how highly we are in debt to Western money lenders, our problems will compound after coronavirus leaves. (We owe the world $92 billion and Pakistan’s external debt and liabilities were 39.5% of its GDP as of Dec 31, 2019). With the government’s revenue base shutting down and the onus of foreign repayments, the future is bleak. Pakistan has almost doubled its cash support program (Rs12,000 for 12 million in a Rs144 billion package. The overall funding including subsidies for consumers and businesses comes to Rs1.2 trillion) which will ease people’s problems under the lockdown but the country can’t afford this for long.
Dr Farrukh Saleem, former Economic Coordination Committee member, economist
The lockdown is necessary. It doesn’t take an economist to understand what will happen to the economy when people are dying. However, the country needs to reach a conclusion with uniform policies. The provincial, federal governments and security establishment all have different decisions. Who do I listen to? Policy needs to be aligned or the lockdown will neither achieve the desired outcome nor will it end soon.
Ahmed Chinoy, chairman of Pakistan Cloth Merchants Association, and director of the Pakistan Stock Exchange
I used to think we should let companies function partially but in order for one company to produce materials, a whole value chain needs to be in place. You need raw material and packaging and consumers… We must observe a strict lockdown for some days to get rid of this once and for all, and then we can run companies on a full-fledged basis.
I ask the State Bank of Pakistan, however, that when it announces loans with the least possible interest rates and moratoriums—postponement on debt payments, among other perks—why is it only benefiting large-scale industrialists? They will profit and take loans as much as they can. What about small and medium industrialists who will be denied such loans? How will they retain their workforce and in fact their businesses amid the lockdown?
Zafar Mehmood, chairman of the Pakistan Soap Manufacturers Association
A lockdown to curtail Covid is necessary, but at the same time running industries is necessary too. They are allowing essential companies to manufacture products but these companies need other raw materials and post-production material to make and dispatch stuff. To produce soap we need caustic soda, fats, chemicals and then to package them we need paper, ink, adhesive and other materials whose industries are shut down. How do you think we will produce soap when the whole supply chain is disrupted? Our industries can take care of themselves if the government rolls out an SOP. And then when industrialists and traders don’t comply with the SOP, you shut them down. It’s as simple as that.
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Khuwaja M Zubair, chairman of the Karachi Cotton Association
The lockdown is necessary and the way the government is allowing essential services to run is sensible. But industries need to run. We must institutionalize social compliance and roll out SOPs to allow industries to function partially. Across the board a lockdown is not going to help and the companies that qualify the standards set by the SOPs to work amid the pandemic should be allowed to run. We can’t open our markets but we can let people work as advised by SOPs and those who violate, you shut them down.
Amin Yousuf Balgamwala, chairman Pakistan Chemicals and Dyes Merchants Association, former director of PSX
Our industry should be allowed to work from 10am to 4pm. Our industry only deals with businesses and industries. Without our deliveries and imports and customs clearance, we cannot dispatch chemicals to textile industries and others, including those that produce hand sanitizer.
We come under essential services but have still been facing issues from the authorities. We import food colors, too and our chemicals are essential for textile manufacturers. The customs and Karachi Port Trust said they will waive demurrage charges for their containers parked there due to the lockdown but of late did not implement this and many of our partners had to pay.
On one hand you see religious people and families violating all the rules and on the other, you are not allowing essential industries to run in spite of their reassurances to abide by SOPs.
Muzzammil Aslam, economist and CEO of Invest and Finance Securities
For each day under lockdown in Karachi, Pakistan incurs a loss of an estimated $500 million. The only benefit we have achieved is an improvement in our air quality index. Pakistan cannot afford to shut down its economic activities like the rest of the world. It will go bankrupt. A smart lockdown with strict precautions, rather than one across the board would do a better job.
The government can enforce Section 144 and quarantine areas where it identifies cases rather than seal an entire economic hub. We have millions of people who earn and survive day to day. The government cannot feed them all. It does not have that much money.
All Karachi Tajir Ittehad chairman Ateeq Mir
While the lockdown is necessary, the government must, at least partially, allow traders to continue to do businesses or things will turn ugly. Pakistan will face worse consequences than countries with the highest death rate. These countries will get back on their feet shortly after the pandemic, but Pakistan will deal with its implications for generations to come.
AKD group chairman Aqeel Karim Dhedhi
The lockdown did no good as social distancing was being violated in the markets. We have created serious panic by time-limiting markets so people are rushing to them more than usual. Neither the Sindh government nor the federal government is rich enough to feed millions every day. They must let businesses run—with precautions obviously.
Governments around the world are looking to each other for economic strategy but for places like Pakistan, it is hard to say with absolute certainty if someone else’s formula will work. This is why there has been so much debate in Islamabad and the provincial capitals. Now there is talk of extending it to April 21 because provinces like Sindh fear a resurgence of coronavirus.
By this week Islamabad was giving out Rs12,000 per family under the Ehsaas Emergency Cash Assistance program which it will be able to manage for 12 million for four months with Rs144 billion.
Pakistan is set to receive $1.4 billion from the IMF next week. This emergency fund will help keep the economy afloat. The bad news is that the economic growth forecast has been revised down to 0.8% from 2.6% for the current fiscal year. Exports are expected to plunge 50%, according to the PM’s Advisor on Commerce Abdul Razzak Dawood in a Bloomberg survey.
The Pakistani rupee was one of the worst performing currencies in Asia and as much of the $3.4 billion invested in its short-term treasury bills were taken out by investors from March onwards. The rupee depreciated against the dollar after the greenback rose from Rs154 in early March to Rs169 before the central bank intervened and brought it down to Rs166.
The central bank has cut interest rates and announced several other measures to help businesses as well as workers.
SAMAA Money spoke to nine prominent business representatives and economy observers. Six out of them said industries should run partially with strict SOPs and endorsed the overall lockdown. Only one person, a big name in the stock market, said he did not agree with the lockdown and one other felt it was a necessary evil but that government needed to be giving out one uniform message.
This is what they said:
Kaiser Bengali, economist
He thinks we can save the economy after we save lives but he cautions that given how highly we are in debt to Western money lenders, our problems will compound after coronavirus leaves. (We owe the world $92 billion and Pakistan’s external debt and liabilities were 39.5% of its GDP as of Dec 31, 2019). With the government’s revenue base shutting down and the onus of foreign repayments, the future is bleak. Pakistan has almost doubled its cash support program (Rs12,000 for 12 million in a Rs144 billion package. The overall funding including subsidies for consumers and businesses comes to Rs1.2 trillion) which will ease people’s problems under the lockdown but the country can’t afford this for long.
Dr Farrukh Saleem, former Economic Coordination Committee member, economist
The lockdown is necessary. It doesn’t take an economist to understand what will happen to the economy when people are dying. However, the country needs to reach a conclusion with uniform policies. The provincial, federal governments and security establishment all have different decisions. Who do I listen to? Policy needs to be aligned or the lockdown will neither achieve the desired outcome nor will it end soon.
Ahmed Chinoy, chairman of Pakistan Cloth Merchants Association, and director of the Pakistan Stock Exchange
I used to think we should let companies function partially but in order for one company to produce materials, a whole value chain needs to be in place. You need raw material and packaging and consumers… We must observe a strict lockdown for some days to get rid of this once and for all, and then we can run companies on a full-fledged basis.
I ask the State Bank of Pakistan, however, that when it announces loans with the least possible interest rates and moratoriums—postponement on debt payments, among other perks—why is it only benefiting large-scale industrialists? They will profit and take loans as much as they can. What about small and medium industrialists who will be denied such loans? How will they retain their workforce and in fact their businesses amid the lockdown?
Zafar Mehmood, chairman of the Pakistan Soap Manufacturers Association
A lockdown to curtail Covid is necessary, but at the same time running industries is necessary too. They are allowing essential companies to manufacture products but these companies need other raw materials and post-production material to make and dispatch stuff. To produce soap we need caustic soda, fats, chemicals and then to package them we need paper, ink, adhesive and other materials whose industries are shut down. How do you think we will produce soap when the whole supply chain is disrupted? Our industries can take care of themselves if the government rolls out an SOP. And then when industrialists and traders don’t comply with the SOP, you shut them down. It’s as simple as that.
Volume 0%
Khuwaja M Zubair, chairman of the Karachi Cotton Association
The lockdown is necessary and the way the government is allowing essential services to run is sensible. But industries need to run. We must institutionalize social compliance and roll out SOPs to allow industries to function partially. Across the board a lockdown is not going to help and the companies that qualify the standards set by the SOPs to work amid the pandemic should be allowed to run. We can’t open our markets but we can let people work as advised by SOPs and those who violate, you shut them down.
Amin Yousuf Balgamwala, chairman Pakistan Chemicals and Dyes Merchants Association, former director of PSX
Our industry should be allowed to work from 10am to 4pm. Our industry only deals with businesses and industries. Without our deliveries and imports and customs clearance, we cannot dispatch chemicals to textile industries and others, including those that produce hand sanitizer.
We come under essential services but have still been facing issues from the authorities. We import food colors, too and our chemicals are essential for textile manufacturers. The customs and Karachi Port Trust said they will waive demurrage charges for their containers parked there due to the lockdown but of late did not implement this and many of our partners had to pay.
On one hand you see religious people and families violating all the rules and on the other, you are not allowing essential industries to run in spite of their reassurances to abide by SOPs.
Muzzammil Aslam, economist and CEO of Invest and Finance Securities
For each day under lockdown in Karachi, Pakistan incurs a loss of an estimated $500 million. The only benefit we have achieved is an improvement in our air quality index. Pakistan cannot afford to shut down its economic activities like the rest of the world. It will go bankrupt. A smart lockdown with strict precautions, rather than one across the board would do a better job.
The government can enforce Section 144 and quarantine areas where it identifies cases rather than seal an entire economic hub. We have millions of people who earn and survive day to day. The government cannot feed them all. It does not have that much money.
All Karachi Tajir Ittehad chairman Ateeq Mir
While the lockdown is necessary, the government must, at least partially, allow traders to continue to do businesses or things will turn ugly. Pakistan will face worse consequences than countries with the highest death rate. These countries will get back on their feet shortly after the pandemic, but Pakistan will deal with its implications for generations to come.
AKD group chairman Aqeel Karim Dhedhi
The lockdown did no good as social distancing was being violated in the markets. We have created serious panic by time-limiting markets so people are rushing to them more than usual. Neither the Sindh government nor the federal government is rich enough to feed millions every day. They must let businesses run—with precautions obviously.
