is operating at 30% below capacity. The limited growth is due to a lack of comparative advantage, the lack of credit availability and a high interest rate. Despite inflation being well below double digits, interest rates are as high as 15 to 18 per cent on loans! This is too high to keep the present economy afloat, let alone raise it to a maintainable level of growth.14) There is also a lack of confidence in the government by the private sector. How can a government that cannot even handle domestic peace issues be expected to turn around an economy that is in the throes of a downward spiral? Therefore the private sector has been occupied in short-term trading and currency speculations which do nothing for growth or the welfare of the state.15) An obvious result of this situation is that the disparity between the rich and the poor has grown. The share of the poorest 20 per cent of households has fallen to 7 per cent while the richest 20 per cent are receiving over 45 per cent. The low rate of economic growth and the high rate of inflation over the last few years have left the poor with no buying power resulting in almost a third of the population living below the poverty line. There is also anger amongst the poor about the fact that the incidence of increased taxation has been heaviest for them; expenditures on services for them have declined. Social tensions are rising with the growth of the absolute number of poor, illiterate and jobless, as employment opportunities and wages decline due to the stagnating economy. Such conditions are hardly conducive to political and social stability, without which growth will remain a distant dream.On top of all of this, Pakistan is plagued by the curse of the IMF and World Bank. Constant defects in the current account of the balance of payments and depleting foreign exchange reserves is causing the extension of credit to become an exercise in haggling and bargaining. Each time there are negotiations ...
