Pakistan Tehreek-e-Insaf- (PTI) led government has failed to come up with a clear-cut roadmap for putting the derailed economy back on track of growth during the first six months in power.
Frustration is written all over them. Even those who were considered supporters or sympathisers for the PTI-led regime are betraying their concerns and latest example was the unceremonious removal of Dr Farrukh Saleem as the spokesman for the government on economic and energy issues for voicing his worried over the state of economy.
The government had so far demonstrated that it lacked clarity as well as vision and capability to weather the gathering storms on economic fronts.
Even Finance Minister Asad Umar was also rumored to have been facing the axe for nonperformance. The question is how the top economic manager will be able to perform up to his abilities amid such uncertainties.
When this government came into power, there was no doubt that Umar would be made minister for finance so it could not be assumed that he did not know about it. He must already have been doing his homework to handle the looming economic challenges, devising strategies, roadmaps, and policies reviving the economy in the short-, medium-, and long-term.
There are some questions that beg answers but none seems to have any precise and exact ones. The last two International Monetary Fund (IMF) programs were signed during the tenures of Pakistan People’s Party (PPP) and Pakistan Muslim League-Nawaz (PMLN) regimes. The ministry of finance was always bestowed with competent officers such as Dr Waqar Masood, Abdul Wajid Rana, Shahid Mehmood, and Asad Amin. Right now the Secretary Finance Arif Ahmed Khan has no clue whatsoever about the economic issues so he had no interaction with the concerned players and stakeholders of the economy at any level. Why on earth he was given a responsibility he was unwilling to shoulder, to begin with.
The government, after waiting for six months, finally appointed a new Member Inland Revenue Policy, because of situation that arose due to flawed promises and unrealistic projections. One thing could be stated clearly that the new, young but competent officers, brought into the taxation authority would not indulge in bluff game at least and do their best to improve revenue position in next six months of this fiscal.
After taking the helms, the government claimed that Pakistan required a bailout package so they would explore both avenues including seeking financial help from friendly countries as well as making efforts to convince the IMF for another bailout package.
On bilateral fronts, Pakistan managed to secure a package from Saudi Arabia and UAE to the tune of $6 billion each for oil facility on deferred payment and deposits for the central bank. The negotiations for another $2 billion loan for balance of support with China are already underway and expected to be finalised within this month.
What is amiss that even after winning financial support uncertainties on the economic front are dying hard?
There is a need to understand that bilateral package can provide breathing space to Pakistan for six months to one year but could not resolve its underlying deep-rooted structural problems as without fixing them the monster of imbalance on internal and external fronts would resurface after some time.
It was mistake on the part of the government that it prolonged the timeframe for evolving staff level agreement with the IMF despite the fact that there was no other option.
The economic team argued that they took some extra time in a bid to convince the Fund staff for a prescription of lenient conditions but this strategy had caused more losses on the economic front because the government did not have any effective communication strategy to restore the confidence of investors about the story narrated for revival of economy.
The independent economists believe the whole exercise was directed towards getting another IMF loan as the government was implementing all required prior actions on economic front. The devaluation of rupee by 30 percent, discount rate hike by 425 basis points in totality in last few months and 150 basis points in one go and last but not the least another looming mini-budget are a part of it.
Although, the PTI claimed that it had introduced the mini-budget in September 2018 to cut budget deficit from 7 to 5.1 percent of the GDP, but they must at least admit they were unable to come up with proper homework for presenting it. So now again need has arisen for another mini-budget in a bid to bridge the revenue shortfall of more than Rs160 billion in first half of the current fiscal year.
The exports are not picking up and current account deficit is still on the higher side. The monster of circular debt has peaked to Rs1.4 trillion and the country has already plunged into a new phase of darkness because of torturous load-shedding of power and gas and the situation might aggravate in coming weeks.
The situation is not under control on any economic front so the government will have to come up with a solution, otherwise this storm may also create ripples on the political front for the PTI in next few months.
When the IMF program could not finalise for prolonged it resulted into the involvement of some internal and external forces so the government must go ahead without wasting any further time.
Secondly, Minister for Finance Asad Umar stopped some summaries related to sugar industry because the economic team believed there should be no subsidies for any sector. But when it comes to the issue of sugar it becomes a question of political economy and irrespective of political divide the sugar industry is owned by all the leaders of all mainstream political parties. The sugar summaries also aggravated problems for Umar as it irked many political heavyweights.
The solution lies in devising a roadmap on short-, medium- and long-term basis, otherwise uncertainties are bound to increase.
The writer is a staff member