How can a government committed to austerity cause a budgetary deficit that is the highest in at least 40 years?
First question: How can a government committed to austerity cause a budgetary deficit that is the highest in at least 40 years? Most economists consider budget deficit as the root of most financial ills.
What went wrong? How on earth did we hit a budget deficit of 8.9 percent of GDP? How on earth did government expenditure exceed its income by a colossal Rs3.4 trillion? If this is not macro-economic instability, then what is? For the record, Bangladesh’s budget deficit is at 5 percent of GDP and India’s is at 3.4 percent.
Question 2: How can a government so averse to taking additional loans raise our debt-to-GDP ratio to 104 percent? For the record, in September 2018, a month after the PTI took over, our debt-to-GDP ratio stood at 80 percent. How on earth did we manage to hike our debt-to-GDP to 104 percent of GDP in just 9 months? What sort of a transition is that?
Question 3: How can a government so committed to institutional reforms increase debt of Public Sector Enterprises (PSEs) to Rs2.1 trillion? What went wrong? For the record, in September 2018, a month after the PTI took over, PSEs debt and liabilities stood at Rs1.359 trillion or 3.5 percent of our GDP. How on earth did we manage to take PSE debt to Rs2.1 trillion or 5.5 percent of our GDP? What that means is that PSEs are bleeding more profusely than ever before.
Question 4: How can a government so averse to taking loans raise Pakistan’s total debt and liabilities to an unprecedented Rs40 trillion? For the record, the PPP took Pakistan’s total debt and liabilities from Rs6 trillion to Rs16 trillion in five years (2008-2013). Yes, the PML-N took Pakistan’s total debt and liabilities from Rs16 trillion to Rs30 trillion (2013-2018). How on earth did the PTI manage to take Pakistan’s total debt and liabilities from Rs30 trillion to Rs40 trillion in just one year? How did the PTI government manage to add Rs10 trillion in just one year? Lo and behold, it took the PPP five years to add Rs10 trillion.
Question 5: How did we manage to miss our export target of $28 billion by a hefty 20 percent? Who had set the target and what went wrong?
Question 6: Why has there been a drop of 25 percent in the quantity of petroleum products?
Question 7: Why is the capacity utilization in the cement sector down to 50 percent?
Question 8: Why have car sales dropped by 50 percent?
Question 9: Why has private sector borrowing fallen sharply to a negative Rs85 billion in the past two months?
Question 10: What is the government’s policy to fight inflation?
Prime Minister Imran Khan has an ‘iron will’ but there are a thousand miles between that ‘iron will’ and his team’s ‘capacity to implement’. In this era of ‘artificial intelligence’ it’s all about algorithms: ‘iron will’ plus ‘capacity’ equals ‘delivery’. Clearly, will is ‘necessary’ but not ‘sufficient’. No capacity, no delivery.
The writer is a columnist based in Islamabad.
Email: farrukh15hotmail.com Twitter: saleemfarrukh