Economy under stress

It requires no expert to say that the country's economy is under strain. And these have been very well articulated by a leading think tank of the country. The CPD report highlights four major challenges facing the economy namely, implications of the new wave of the global economic crisis, deepening stresses in public finance management, unabated price inflation and increasing pressure on the balance of payments,
We feel that the CPD report is a timely alert for the government who would do well to recognise the dangers and heed the suggestions to offset the likely negative outcomes of the challenges. All the more so when we are told that our ability to respond as robustly as we did in 2008 has lessened because of weakened macroeconomic fundamentals.
It seems that the government is unwilling to acknowledge the reality and continues to persist with a denial mode. This doesn't help our cause at all. The fact is that we are willy-nilly a victim of the downturn in the global economy. There are already strong indications of a double-dip recession with the number of unemployment rising in the US and a good number of countries in Europe facing debt crisis.
That has a knock-on effect on our exports, which grew almost by 41 percent last year, but is showing signs of slowing down this year. And that holds a dangerous portend for us, particularly for the garment industry, which has already shown a dip in the first quarter of the current fiscal year.
Our situation has not been helped by poor utilisation of foreign aid, heavy government borrowing, failure to meet non-tax revenue collection target, rising revenue expenditure, high subsidy, higher interest payments and poor performance with regards to development programmes.
The situation needs deft handling and we feel that the government has to take some hard decisions to sustain the economy. A serious look is needed, among other things, at the subsidy demand as well as government spending and other non-development expenditures as is also the need to address over borrowing by the government.