ISLAMABAD: Former finance minister Shaukat Tarin on Friday criticised Ishaq Dar’s statement on the revival of economy and alleged that he had failed to provide any roadmap to rescue the economy.
In a statement, he said Finance Minister Ishaq Dar failed to present solutions to address a record high inflation with headline inflation averaging 25% during July-Dec 2022, the highest ever recorded.Inflation under the PTI government averaged 10.8% during July-Mar FY2022.
Dar failed to address concerns over rising unemployment, with brokerage companies projecting that the economy will post negative GDP growth in the current year, from 6% growth under the PTI government.
As a result, potentially 4 to 5 million workers are at risk of becoming unemployed due to failed policies of the PDM government. In comparison, the PTI government was creating on average 1.8 million new jobs every year.
He said Dar failed to present a roadmap for increasing the SBP reserves and avoiding a default on external debt payments. The SBP reserves under the PDM government have declined sharply to only $5.8bn in December 2022, only enough to cover one month of imports. This is the lowest level of reserves recorded since the last decade. There is no clarity on the IMF programme resumption and financial assistance from friendly countries.
“We want to know what are the results of world tours enjoyed by the PDM government in the last nine months?”
He said the despite the passage of three months, not a single rupee had been released to KP and Punjab for rehabilitation of flood affected. How is it possible that the government has funds to run a jumbo-sized federal cabinet of 76 ministers but has no money to give relief to people?
Dar spent much of his time singing his government’s praises and criticising the PTI white paper. If he does not believe the facts stated in the PTI white paper, he can read what international institutions had to say about his economic management.
Tarin said even his predecessor Miftah Ismail and other PMLN leaders were critical of Dar’s policies and had publicly called them reckless. Miftah tweeted that while Dar was busy playing ‘peg the dollar below Rs 200’, Bangladesh exports reached $5.4 bn in December while the exports of Pakistan collapsed 16.6% in December to just $2.3bn under Dar’s watch.
He quoted the IMF report which stated that “Pakistan’s macroeconomic stability gains achieved during the EFF have been eroding amid widening external and fiscal imbalances. Against the background of limited exchange rate flexibility, the international reserves have significantly declined, eroding confidence’. (IMF staff report March 2018).
Fiscal Deficit: Fiscal deficits were rising in the last years of the PMLN (2013-2018) government and now in FY2023, the latest data released by the Ministry of Finance shows that the fiscal deficits have increased sharply to Rs1,266bn from Jul to Oct FY23, an increase of 116% from Rs 587bn in the same period last year. This comes despite a record increase in electricity prices and record taxes imposed in the FY23 budget by the PDM government. These deficits are likely to increase further in the days ahead, with the FBR collection falling short by a record Rs 220bn till December.
GDP Growth: Under the Imran Khan government, the economy was expanding at 6% for the second consecutive year with record exports, record large-scale manufacturing output and record output of agriculture crops. The agricultural sector posted growth of 4.4% in FY22, which is the highest posted since FY05. This was driven by 6.6% growth in major crops, the highest since FY05. The large-scale industries posted a record growth of 11.7% in FY22, the second consecutive year of 11% + growth. The economy was booming with record exports of $32bn in FY22, while credit to the private sector grew by 22%.
However, under the PDM government, the economy has nosedived and the SBP now estimates that the GDP growth will slow down to just 2% in the current year, compared to 6% under the PTI government. Even these estimates look optimistic. Due to the draconian tax measures and restrictions on imports, the manufacturing sector has also nosedived and in the first four months posted a 2.9% output. Independent analysts’ published reports indicate the GDP will post negative growth under the PDM leadership.
Inflation: the PDM government policies have unleashed unprecedented inflation, with the CPI inflation averaging 25.1% in the first five months of the current fiscal year. This is the highest inflation recorded in our 77-year history. The prices of essential household commodities including food, energy and daily use items are rising at more than 30% for the last 6 months, as measured by the SPI index. The average electricity prices for end users under the PTI government were around Rs16 per unit, which have now been increased to around Rs34 per unit, an increase of over 100%.
The PDM parties criticised Imran Khan when petrol prices were Rs 150/litre, but when in government, they have raised the prices to Rs214/ litre. The increase in prices for consumers includes a record Rs50/litre tax (PL), whereas under Imran Khan’s government, the PL was reduced to 0 to shield people from the increase in international oil prices.
The same has happened to diesel prices which have been raised to Rs227/litre, compared to Rs150 under the PTI government. The increase in prices of petroleum products has unleashed an unprecedented wave of inflation, as transportation costs skyrocketed.
Food prices have also increased at a record pace under the PDM regime, making it almost impossible for people to meet their kitchen expenses. According to the latest report by the PBS, the prices of flour have increased to Rs81 per kg in December 2022, an increase of 38% from Rs58 per kg in March 2022. According to media reports, the actual prices faced by consumers are even higher at Rs140-160 per kg, indicating an increase of nearly 175% in the prices of flour since the VONC.
