It is getting ugly out there. The private sector says they find business pages of newspapers pretty depressing. The government needs to generate positive economic news to nurture positive sentiments among key economic players. If law and order and the rising cost of living have driven masses up the wall, the hike in the cost of doing business and political uncertainty are dampening prospects of much-needed investment in agriculture and manufacturing sectors.

“Use your connections to get oil facility, charm overseas investors to invest in infrastructure, sell the new image of a democratic Pakistan to European Union and get as much support as possible to bridge social sector deficit. Tell multilateral donors if they want to improve their image, they must support the democratic government by doing what they are best at for Pakistan today. The World Bank and IMF are perceived to be ardent supporters of military dictators in Pakistan as it is during their tenures that they lend most liberally”, said a businessman who sees light at the end of the tunnel if cards are played intelligently by the government.

”No one is interested in knowing what is wrong with the economy. However, if someone can elaborate how a turnaround will be engineered that would be captivating for businessmen,” said another business leader. Unfortunately, nine out of ten people like to be anonymous. The message that came loud and clear from the private sector was that the wait for political stability is becoming tedious. Political impasse must not be allowed to paralyse the economy.

The government could create a core economic lead team for the next five years that would stay in office to deliver on economic front, irrespective of the shape and design of the federal and provincial governments. “Extraordinary situation begs for extraordinary response”, commented a textile tycoon.

But political analysts believe that institution building, good governance and political stability can only be ensured by solving constitutional issues including judicial crisis.

The fragile macroeconomic indicators: price hike, fiscal and external deficits, lean performance of agriculture and industry coupled with sliding rupee, tumbling stock market and falling international credit ratings clearly indicate the direction in which the economy is heading.

Madam Governor Dr Shamshad Akhtar finally made a move on Thursday last when she mandated commercial banks to raise the return on savings to the minimum of five per cent and raised the discount rate by one and a half to 12 per cent in an effort to apply break to the upward drive of inflation.

”This was too much in a go and too late”, said a corporate bigwig criticising the governor who allowed free hand to banks to exploit depositors all through her tenure and is punishing investors for the folly of financially irresponsible government and banks by increasing the cost of credit. Dr Shamshad’s three year contract will expire in November 2008.

”So far all that the elected government has been able to do is to scare investors. They have signalled that more taxes will be introduced on capital gains and property transactions. They are telling people that government is bankrupt so the size of PSDP would actually be reduced which means no improvement of physical infrastructure. They have announced that subsidies will be reduced or withdrawn which would increase the costs,” said a businessman from Lahore.

”It does not take a rocket science to get the sense of direction the economy is heading towards”, said a businessman on condition of anonymity.

”The situation is still retrievable”, said a businessman from Islamabad. “All you need is will. Where there is will there is a way”.

”Believe me, in Islamabad, in the ministries I visited, there is absolutely no sense of urgency. It is frustratingly calm. Officers are found with files to get approval of the relevant minister for scholarships before the fund lapse in June. It is life as usual,” said a Karachiite visiting Islamabad.

”Life is certainly not as usual in the economic ministries. We are working hard to meet the deadlines of economic documents expected early next month”, Khawaja Shahab, federal secretary industries told Dawn over telephone from Islamabad. The federal secretary finance Farrukh Qayum and the minister Naveed Qamar cannot be reached because of their busy schedule.

”The business community is in touch with the government discussing different proposals acceptable to both sides. They cannot dodge issues any longer. They will have to improve governance and refrain from opting for easy way out”, said Iqbal Ibrahim from Lahore. Ibrahim heads All Pakistan Textile Mills Association.

He was critical of the recent increase in gas rates and interest rates. “What does Sui gas has to do with international oil price hike. If the SBP failed to control inflation why should the private sector be penalised by increasing credit cost”, he retorted.

”Democracy will take time to grow roots and stabilise in the security state of Pakistan. The economy on a slippery slope cannot hold on. The government will have to sideline the vested interest and revitalise the agriculture to feed the growing demand of food and raw material. Till the time, the private sector regains confidence, the government should start some public sector projects to cover infrastructure deficit and absorb manpower in gainful economic activity”, said a senior analyst.

” The tariff rates should be increased to discourage imports of non-essential items. It would not be easy as importers’ lobby and commission agents rule the roost,” said the head of an industrial house.

The recent incidents in which mob lynched and torched bandits were horrifying. More than anything else, they also reflected the level of frustration and desperation amongst the common people. It would be naïve to consider them one off incidents un less the rule of law prevails in the country. These incident are also indicative of the havoc that could be played out across the country if economic pressure continue to mount and economic activity fails to pick up pace.

”It sends shivers down my spine as I see a strong possibility of mobs invading food godowns and God forbid, in the end marching towards well off localities to loot private property to vent their anger over economic injustice,” said a worried manager at an influential business house planning to move to West with family for the time being.