‘Change’ is indeed here: Imran Khan is now the country’s prime minister, with a popular base and institutional support. There is no going back from what he had promised: a return of looted money, and raising donations from overseas Pakistanis for a much-needed dam that is supposed to fill the exchequer with much-needed foreign exchange. By chasing his utopia, hasn’t he put his political fortunes on the line?
The people of Pakistan have been fed fantastic stories about billions of stolen dollars – guesstimated to be more than our GDP– stashed outside a dollar-starved country, and cases of corruption allegedly amounting to trillions of rupees that are in the courts or under investigation and which are sufficient to build at least four Diamer-Bhasha dams. The Pakistani diaspora trusts the Great Khan and they can, at best, contribute in millions – not the billions of dollars that are needed to build one dam ($14 billion) and fill the current account deficit which is now $2.2 billion a month.
The re-launch of the PM-CJ Fund for Dams, with the prime minister’s appeal to overseas Pakistanis to contribute $1000 each reminds us of General Musharraf’s ‘President’s Relief Fund’ and former prime minister Nawaz Sharif’s ‘Qarz Utaro, Mulk Sanvaro’ scheme to pay off Pakistan’s debt through public donations. Mega-infrastructure projects, such as the Diamer-Bhasha Dam, cannot be crowd-funded. Charity money or recovered ill-gotten money is no substitute to public finance, investment, savings, pricing and plugging huge losses of state-run businesses.
Notwithstanding all the fantasies and gimmickry masquerading as public policy, Finance Minister Asad Umar is busy hearing diverse financial experts from among his otherwise depleted Economic Advisory Council – after the resignation of three leading experts as a protest against bigotry – to find some liberal economic recipes in the fiscal sphere, ostensibly to avoid a similar macroeconomic structural adjustment programme from the IMF. He is reportedly drastically revising down the Public Sector Development Programme, weighing to increase taxation and desperately exploring other bilateral financial sources to plug the over $18 billion current account deficit.
Ways to expand export and drastically cut down on avoidable import are being explored. Gas and oil prices have been raised to overcome circular debt and subsidies are also being revisited. Various fiscal measures are being considered to further tighten the belts of the people, since most of these liberal economists know nothing but how to further squeeze the already squeezed. One must ask these economic advisers: what else is the IMF’s structural adjustment programme? It seems the finance minister is preparing the grounds to become eligible for an agreement with the IMF after taking demand-management measures that are likely to slow down growth from the 5.8 percent peak the last government had left it in.
If at all the PTI government is committed to its electoral promises, it should be cutting down all non-development expenditures, including shutting down ministries and divisions devolved to the provinces under the 18th Amendment, bringing down the over a trillion-rupee annual losses in state enterprises and clamping down on pilferages and rents. Imran Khan had promised to almost double tax collection to Rs8000 billion, rather than adding the burden on those few hundred thousand taxpayers who are already paying their due. Instead of radically changing the political economy of resource generation by directly taxing the rich, including landlords, and drastically reversing the current pattern of wasteful resource allocation to improve social and human security, the PTI government is obsessed with cosmetic drives at austerity.
Pakistan’s trade deficit emanates from stagnant low-value exports and undesirable imports of consumer and luxury goods. Exports cannot expand without expanding and diversifying our export base and moving towards high value-added exports of relative advantage in a competitive world. Closing the doors to the regional market on strategic grounds does not make any economic sense. It is encouraging to note that the government raised the grave trade imbalance issue with the visiting Chinese foreign minister. Pakistan’s trade deficit with China last year was $16.4 billion and our exports were just $1.8 billion. No doubt the Chinese have invested a lot of money under CPEC and our import bill has swollen partly due to the import of machinery. But the Pakistani market is inundated with all types of Chinese consumer goods and our exports don’t find a way into China. China has allowed access to other developing countries to its market and similar facilities could be extended to Pakistan.
But the kind of amateurishness being shown by government officials regarding international contracts, such as CPEC and the LNG contract with Qatar, is highly self-destructive. PM’s Adviser on Commerce Abdul Razzak Dawood managed to create a controversy regarding the CPEC agreements. Notwithstanding his clarification of his interview with the Financial Times, his conflict of interest – due to Descon, which he heads – has raised doubts about the whole ‘game-changer’ project. If the previous government could not do proper homework, what homework has Dawood done to renegotiate the terms?
Indeed, there are issues of transparency, prioritisation, competitiveness and inclusion of local entrepreneurs, work force and using CPEC to build Pakistan’s self-sustaining technological, industrial and agricultural base to get out of the trap of dependency. It seems the government has no clue about the economy. The assurances given by Chinese Foreign Minister Wang Yi, to cater to Pakistan’s interests and the clarification regarding Chinese debt should provide the basis for improvements that suit us. But remember: no other county could even think of taking a risk of investing in Pakistan – and, that too, to the extent of 60 billion dollars. We must not jeopardise CPEC’s prospects for our future.
A lot is being said about the foreign loans that can be managed mid-term, if we pursue re-scheduling, spend less, save more and invest more in the most productive sectors. But being a dependent and parasitic economy and due to a heavier super-structure than our economic base, we cannot get out of the current debt-trap. Debt is bad if spent on consumption and it is good if invested in productive sectors and on human resources. The economic strategy has to be fundamentally revised and directed towards sustainable growth which is centred around an export-oriented industrial base, more productive agriculture, knowledge-based economy and highly trained and educated human resources.
But reliance on a liberal economic strategy would puncture the balloon of populist utopia and expose the rhetoric of ‘changing the status-quo’. We had already seen the degeneration of the ‘change’ mantra when all kinds of turncoats and representatives of the status quo were inducted into the PTI and promised lucrative posts. In his September 6 speech, PM Imran Khan vowed not to fight anybody else’s wars, and pursue peace and cooperation with the neighbours. But will he be able to overcome the duplicity of our diplomacy and take Pakistan out of its current international isolation?
With the flag of the Charter of Medina in his hand and an agenda for social and human security – along with protocol and prestige from non-elected institutions – will Prime Minister Khan tilt the scales in favour of an egalitarian democracy or, on failing to realise his utopian aims, succumb to his authoritarian impulses? Given the current power arrangement, will the fifth prime minister of a troubled ‘democratic transition’ become autonomous of institutional constraints and deliver on the promises he has made – or play to other’s tunes? It is yet premature to pass a judgement on his prospects since he deserves enough time to roll out his yet-to-be formulated plan of action.
The writer is a senior journalist.