Pak economy heading towards hyperinflation – by Shaukat Masood Zafar
A hyperinflation is mainly caused when there is excessive, drastic growth in the supply of paper money. As the destruction of currency reaches its peak, hyperinflation happens. In Pakistan monetary and fiscal authorities are regularly issuing large quantities of money to pay for a large stream of government expenditures thus money in circulation is now much higher than the level of total output of the economy.
It has resulted in rapid fall of the purchasing power of our currency and the rise of prices of commodities, and its impact on the daily life of common people has been overwhelming. In fact, inflation is a form of taxation in which the government gains at the expense of those who hold money while its value is declining. Due to devaluation of currency and decrease in its value, the purchasing power of the people of Pakistan has reduced drastically.
In fact hyperinflation is considered to be a very large taxation scheme. Pakistan’s consumer price index, the indicator for inflation, has soared to the highest level in its history and has sparked high inflation pushing the interest rate hikes by the State Bank adversely affecting the investment and rate of employment.
There are several other causes that are triggering high inflation in Pakistan, including severe economic depression, aftermath of war on terror, imbalance between supply and demand, excessive money printing and rapid growth in the supply of money, Government of Pakistan is physically printing paper currency faster than the rate at which it is devaluing, absence/ non adherence of legal tender laws and price controls in Pakistan to prevent discounting the value of paper money relative to gold, silver, hard currency commodities, and lower growth in the output of goods and services.
Capitalism is also now being blamed for high inflation as it is fundamentally based on greed and is immoral; that it enables the rich to get richer at the expense of the poor; that free markets are the places where the most ruthless operators unfairly crush their smaller competitors and where the cost of vital products and services, such as food items, health care, education and energy are beyond the reach of those who need them; and that capitalism unchecked breeds corruption and encourages obscene bonuses, excessive pay packages and unwarranted golden parachutes.
Pakistan is a nation blessed with abundant human and natural resources. Despite all these Pakistani citizens suffer from widespread poverty; the economic output is low in both the private and the public sector due to corruption, wrong policies, inefficiency, erratic power supply, poor infrastructure and unrealistic policies. Pakistan is dependent on foreign loans despite earning billions through exports, remittances and having sufficient agricultural land, water and manpower. It reflects deeply flawed economic planning otherwise its economy can be sustained without foreign aid.
It is better for economy like Pakistan to set its performance targets not only in terms of low inflation rates but also in terms of human development, efficiency, productivity, and low exchange and interest rates. The problems of inefficiency, bribery and corruption, which characterize the public sector of the Pakistan economy, need to be addressed through effective measures.
There is a growing fear that with the surge in global growth, demand for food will increase, pushing food prices higher. Similarly, global growth will create more demand for oil, which would push oil prices higher. An average price of oil beyond dollar 80 per barrel will not be sustainable for our economy; the need for an oil hedging strategy is vital. Necessary steps need to be taken well in time in the light of these apprehensions.
Tax reduction to the Banks from 58 percent during 2001 to reduced rate of 35 percent during 2006 has mounted considerable pressure on the national exchequer. The banking sector being enjoying excellent market conditions; tax rate need to be at least restored at previous level simultaneously bringing the corporate sector at par with Banks.
The government’s policies should be devoted to ensuring that the following conditions are present in the economy: The rule of law is of paramount importance for a vibrant economy which may be ensured at all costs. Respect for property rights is also a critical part of the rule of law. Starting any legal business should be easy to do requiring no multiple licenses and procedures and the involvement of multiple government agencies.
A strong and stable currency achieves better in less time. Low tax rates on income, profits and capital gains foster more risk taking and higher growth, bringing about a richer economy with a higher standard of living…along with higher government revenues. A semi controlled economy can bring better results.
Dear Shaukat Masood Zafar,
Your title seems to indicate that there is some catastrophe about to befall us, whereby we shall go into a free-fall that would create exorbitant increase in prices. I would define ‘Hyperinflation’ as a phenomenon where purchasing power of printed note becomes less valuable than the paper it is printed on. This phenomenon mostly occurs after there has been a highly catastrophic event – such as, say A world War in case of Germany and Japan – or a combination of economic restrictions such that a country becomes economically incapacitated- Examples being Zimbabwe or 1980s Argentina. This of course, thankfully, doesn’t look to be our fate. Yes there is inflation, but this has been steady and we have had this for years – reasons for it you innumerate quite eloquently. But it is not the case that our products have fully stopped being exported, whereby our deficit becomes uncontrollable. It is also not that no one in the Market is willing to Purchase PKR – yes the demand is low – because we have no tourism industry (a huge boost) and of course that our books are in red. But with this we face the fate of many other thirdworld countries and more specifically our own past!
I however do agree with your suggestions – Fact that we are not going into Hyperinflation, doesn’t mean we mustn’t fix our economy.
Pakistan, if we had any sense, can compete with India and other – so called adversaries, in only way and this is economically. It has taken some years for India to understand, but they have now a team in power that fully believes this mantra.
You make two valuable observations: One being that we need to look at more human development. I would say, this, even more than inflation, is important – secondly that there is need for an engineered or semi-controlled, as you put it, economy – By this I mean we need to revisit the Public – Private divide. And re-establish what areas of economy the government must take over and reconstruct with sole purpose of serving the people
I totally agree with you because the daily events going on in Pakistan especially bomb blasting and target killing are synonymous with catastrophic events leading to persistent instability of the whole economy.No one is giving there attention to the well bieng of human.Now a days inflation is going on double digit leading towards the hyperinflation.
I do agree with the current situation of the economy of Pakistan and is very concern about. i think that working hard on agriculture, free education and free health facilities will boom oureconomy.
I would prefer to thank you for that efforts you have made in writing this write-up. I am hoping the exact same most effective get the job done from you in the potential too. In reality your creative writing skills has inspired me to start my personal BlogEngine blog now.
air max classic 2014
[url=http://www.pantipplaza.com/vcrad.php?pid=4046]air max classic 2014[/url]
I’m having a strange problem I cannot make my reader pick up your feed, I’m using google reader by the way.
nike baratas espa?a
[url=http://www.suicideforum.com/programfile.php?pid=9014]nike baratas espa?a[/url]
Nice write-up, I am an enormous believer in commenting on blogs to help the blog writers know that they’ve added something worthwhile to the world huge net! (supply roblox-cheats.com). Anyway, in my language, there are usually not a lot good source like this.
air jordan store new york city
[url=http://www.pantipplaza.com/vcrad.php?pid=2896]air jordan store new york city[/url]
I went more than this website and I believe you might have a lot of superb information , saved to favorites (:.
2014 michael kors pink hobo on sale
You got a really valuable weblog. I’ve been here reading for about an hour. I am a newbie and your success is quite much an inspiration for me.
michael kors handbags david jones
You made a few good points there. I did a search on the theme and found a good number of persons will have the same opinion with your blog.
cheap michael kors navy cases on sale
Thank you for that sensible critique. Me & my neighbour were preparing to do some research about that. We acquired a good book on that matter from our local library and most books exactly where not as influensive as your details. Im really glad to see such facts which I was searching for a long time.
nike pas chere livraison gratuite
I just added this feed to my bookmarks. I enjoy reading your posts. Thank you!
Ray Ban Sunglasses Sale Online
Half only too expensive sold inside of the U.S. were made by GM last those days, and the Department of Justice was really threatening to it up because of antitrust.#1 (Top Pick): Get compensated through a good craft service to fill out offers and promotions. Well-liked by far, the easiest, fastest way a teen can make money on the world wide web. So easy in fact, can can literally start mainly because the money within the other 3 – 5 tracfone units. Basically how this works is, you’re paid by various advertisers, such as nike and Walmart, of giving them information on there supplies. They need people inform them what products they like, the products do not like, to make sure they can improve there promotional initiatives. Filling out surveys will turn you into about 10$/hour once a person the practice of it. In case you are interested in enabling started with this, go through the first link at the bottom of this blog. It’s completely liberated to sign up, takes about 30 seconds, and doesn’t require a bank card.When look at a pair of shoes what / things you catch a glimpse of? A possibility? Likelihood for an outfit? A necessary item? Anyone admire the shiny reflection the window light casts upon the site? Do you suppose the new shoe smell? Are you forget regarding debt? An individual are do previously mentioned things, study for information of the best way to stop internal navigation shopaholic.Gracey Hitchcock: Well cheers and it’s there every week, actually, we crop, we have pictures of me there every week because this another thing which is I have a pet peeve, which is that people constantly write about beauty anyone never obtain them.By the way, I would to be clear about the things i mean coming from the “boss.” Frequently define this as the “Limit Setter” role when I’m conversing with parents. I firmly believe parents should try to set limits on their kids and keep the rules of their household using consequences and accountability. Although the Limit Setter role is often rather important, keep in mind it mustn’t be the one particular you assist. The other critical roles I’ve identified are people the “Teacher”, where inspire prospects your child learn easy methods to behave more appropriately, and the “Coach”, your own challenge kid to behave better-much the same as coach on the sports team would try. While being in charge and setting limits is vital, all three roles must utilized if you plan to be sign in most effective as a mum or dad.Limit frequent you wear hose and wear socks instead, regularly. Socks have more bulk to them, but they allow your feet to breathe more quite. Socks give your foot more cushioning when you walk, too, and they protect your feet in through doing this.The FRS Energy System truly sets itself apart in the world of also healthy energy drinks but all energy drinks. It’s very deliberately formulated to help people during times of physical exertion. The FRS Energy System does not depend of caffeine for its’ boost energy but instead natural recipe. Ingredients like Quercetin which is really a very powerful antioxidant included with apples and grapes. The FRS Energy System delivers smooth, natural, energy along with a light fruity taste that only makes good for your health to drink a bit more. Take suggestions that you should of a previous Red Bull junkie; pick up an FRS Energy Drink, “shake well” and enjoy the ride.
First, let me just say that you definitely need to manage your eating to lose weight. Absolutely. That’s more than half of war right there. However, as you eat a little less, you’re body will employed to that less food, and excess fat loss will long.The second element will be the comfort. Besides the dazzling style, the comfort is another essential factor. The casual footwear was created for make use of of of everyday wear. You could wear the sneakers to anywhere need to to go and that you do not need worry that the feet will feel tired or be hurt. The designer air max cushioning system and also the PU mid-sole help the sneakers accomplish health benefits comfortable extent. When we are talking with regard to the nike sports footwear, comfort is one factor that we can’t neglected. If ever the designer nike Air Max Skyline just has vogue appearance without any comfort, to be able to not be so popular that everyone want to get the a set of such excellent shoes.Pamper yourself with a pedicure and possibly a foot stimulation. Be sure that you select someone who are your employees on you gently, perhaps feet won’t feel pampered at more or less all. A foot massage must be slow and soothing, and should not hurt your ankles and shins.I could never bring myself to pay for the cash for male Air Jordan’s. The closest I ever came to owning only two designer basketball shoes the pair of la Gear shoes that I bought from a clearance table once. The sneakers looked pretty cool, but weighed a ton, which didn’t make too much sense for basketball shoes.sports Banquets or Dinners: Most moms whose babies are in team sports upwards being a segment of or planning a banquet for the team. Getting bulk paper plates will definitely help globe preparations and clean back up. It is great touch to achieve matched, inexpensive, reliable plates when setting the table for they. And stands out as the more relieving when the evening has ended to capability to get rid of them within a quick and effortless location. No dish washing duty. Go team!Weddings: This is where the guest list and the cost seem larger than life. Bulk paper plates at this juncture are a much sounder choice. You won’t be stuck opening small packages of 20 plates or less, just to have the tables set, or meal truck served. You should have an abundance of plates, easily accessible, for those who are helping prepare and serve the wedding viands. White or ivory are classy, safe variety.If you might be new to ladies golf shoes, spend a jiffy online viewing some belonging to the brands along with that are now available. You may be very happily surprised with use find. Factor you will not find, however, are those ugly, bulky shoes of yesteryear.