LAHORE: There seems to be no escape for the government and there are no buyers for its rhetoric of putting all blames of economic downslide on the previous government. The economy today is much worse than it was when the last government stepped down.
The multilateral institutions, including the World Bank, International Monetary Fund (IMF), and Asian Development Bank were all praise for the economic turnaround during the Pakistan Muslim League-Nawaz (PML-N) government, until the Panama leaks scandal erupted. The previous government took over from the Pakistan Peoples’ Party (PPP) government, when the economy was growing at 3.8 percent.
It also had to go to the IMF immediately after assuming power. The growth rate steadily increased every year to end at 5.8 percent, which was confirmed by all international institutions (though this government insists it was 5.2 percent).
The downslide started after the entire government machinery was dragged in National Accountability Bureau (NAB) cases. Out of these, only two convictions were witnessed, both very weak.
The first was against Nawaz Sharif, and the other against Hanif Abbasi. Others are still facing accountability courts with no end in sight. This naturally derailed the economy and governance, as everyone that mattered had to devote all time towards defending himself.
Still, when an almost non-functional government gave reigns to the caretakers, the economy was in much better shape. The average inflation was four percent, though it was above five percent in the last month of that government. The interest rate was 6.0 percent. The exports that remained a weak link in PML-N tenure were picking up in its last six months. Still the manufacturing sector growth averaged five percent.
The construction sector was booming, creating over three million jobs in five years. Remittances also posted healthy increase.
The foreign exchange reserves were still in comfortable zone. The actual downslide started during the tenure of interim that paid zero attention to the economy. The foreign exchange reserves started depleting rapidly. The economy was in bad shape when this government assumed power. Nine months down the line, it is in a precarious condition.
Governments after assuming power asses the conditions and plan carefully in light of those conditions. During the initial three months, the new government was aggressively blaming everything on the past government.
Nothing was done to stabilise the economy. The bureaucrats were badly treated and cases of many were sent to NAB. Nine months later, none of them have been convicted, but are still languishing in jails thanks to NAB law of detention that allows 90 days detention. Before the expiry of that period, another case is registered against the same person and then another.
This has demoralised the bureaucracy. We certainly do not have an exemplary bureaucracy, but they are masters in delivering to the satisfaction of the ruling party.
This time around, the bureaucrats are over cautious, as they do not take decisions on their own. For all acts, they want written permission of the ruling elite. This certainly infuriated the ruling party, and we saw cases like Depalpore DPO or the IG Islamabad that were noticed by the higher courts.
The PTI government never realised that it is next to impossible to govern the country without the cooperation and willingness of bureaucracy. The party could not formulate sustainable policies in every sector of the economy.
Its export package failed to deliver; it reduced imports at the cost of growth. The non-essential imports despite heavy regulatory duties decreased less than the decline in spheres that trigger growth.
The first economic advisory council announced by Prime Minister Imran Khan consisted of reputable and globally renowned expat Pakistani economists. After asking one of them to resign on religious protests the others also left in protest.
The PM was left with run of the mill economists, who differed with each other on economic strategy. This resulted in chaos at the economic planning level.
Some economists advised the government to rush to the IMF in order to bring discipline back in economy; others suggested bringing stability first through assistance from friendly countries and then go to the IMF because at that stage IMF conditions would be very harsh.
But with experience, the government must now have realised that we had to take harsher decisions than what the IMF would have suggested, or the economy would continue to spiral down.
The stabilisation rhetoric of the finance minister is amply negated by the growth projection given by both the IMF and the World Bank for the years ahead. On top of that, we still face the prospects of harsher IMF conditions that would devastate the masses. Popularity definitely is no substitute for competence.
