Previous Editions
  • Pakistan’s conditions will continue to deteriorate, with or without IMF
  • Energy sector is one of the most mismanaged sectors

Conversation with Syed Asad Ali Shah — a leading economic analyst

PAGE: Could you tell us about yourself, please?

Syed Asad Ali Shah: I am a Chartered Accountant by profession, have remained a Managing Partner / Senior Partner of Deloitte Pakistan for over 20 years. Also remained President of the Institute of Chartered Accountants of Pakistan, a Board member of the International Federation of Accountants (the global body that represents over 3 million professional accountants worldwide), Chairman of the inter-governmental group on international standards of accounting & reporting (ISAR), within UNCTAD, United Nations, Geneva in 2009. Also remained Advisor to CM Sindh on Finance from 1993-96 with status and powers of Provincial Finance Minister — a quasi-political appointment.

Belongs to a political family, being the son of Syed Qaim Ali Shah, former CM of Sindh and longest-serving parliamentarian in the country, have always maintained my objectivity and independence in my views.

I have been writing on matters of public interest, including macro economy, and governance in the public and private sector. Also remained a member of the Policy Board of SECP and a member of the Task Force on Government Reforms that was chaired by Dr. Ishrat Hussain during the PTI government. 

PAGE: How would you comment on the current state of the economy of Pakistan?

Syed Asad Ali Shah: Obviously, one does not have to be an economic expert to say that our economic conditions are bad and getting worse with time. With the highest rate of inflation, no growth, no employment opportunities, the highest economic & political uncertainty and the continuing devaluation of the rupee, we are seeing a kind of economic meltdown.

And the most disastrous part is homelessness and despondency, as there seems to be no light at the end of the tunnel. None of the political parties seem to have any roadmap or leadership teams that inspire confidence.

PAGE: What is your standpoint on the inflated electricity bills?

Syed Asad Ali Shah: Electricity bills have gone up steeply owing to the high cost of electricity generation (high fuel cost, high capacity payments to IPPs), high line losses, restrictions on subsidies under the IMF programme, imposition of too many taxes on such bills and overall mismanagement of the sector that is well known.

I expect that gas prices will also increase shortly. Unfortunately energy sector is one of the most mismanaged sectors, as it is overwhelmingly in the public sector, and virtually all electricity and gas monopolies, except for Karachi Electric, are in the public sector, that have suffered from poor governance (poor decision-making and indecisiveness) for decades together with 2 incompetent regulators — NEPRA and OGRA. Again, governments remain clueless about how to address serious ailments in this sector which is one of the key reasons for the continuous bleeding of the economy.

PAGE: What is your perspective about business activities at this juncture?

Syed Asad Ali Shah: Businesses are in extremely bad shape. Owing to the 24 percent interest rate, the highest direct and indirect tax rates, business activities in the formal sector, except for banks and some monopolies/cartels struggling to survive. Businesses in the informal sector, where commodity prices are rising due to import restrictions etc. are making money.

PAGE: What is your take on the IMF programme for Pakistan and its ramifications?

Syed Asad Ali Shah: At present, Pakistan has no choice but to work with the IMF. However, I think it is a poorly negotiated programme, as it will not result in achieving its key objective of stabilisation of the economy. As we have observed, despite the IMF programme, the rupee is in free fall and the current account deficit last month of $800 million has virtually eaten away a substantial portion of the IMF tranche we received in early July. It seems that Pakistan is between the devil and the deep blue sea. Without major structural reforms and a disruptive road map, Pakistan’s conditions will continue to deteriorate, with or without IMF.