New govt takes few steps to overcome economic challenges

KARACHI: The new government led by Pakistan Tehreek-e-Insaaf (PTI) has demonstrated its cognizance with the challenges the economy is facing, but it took a very few measures during 100 days after elections to address structural issues that restrained massive foreign debts from fuelling private sector activity, a public policy think tank said on Thursday.

“(The steps) within the first hundred days in government by PTI gives an impression that the party understands long term challenges that are faced by Pakistani economy,” the Policy Research Institute of Market Economy (Prime) said in a report.

The government vowed to create 10 million jobs through construction of five million houses, give concessional loans to startups and develop special economic zones. It set up a body with representation from private sector to take inputs to solve economic difficulties.

“The PTI government set forward in the right direction by identifying challenges in governance, federation, economic growth, agriculture and water, social services, and national security as priority areas,” it said.

“Despite tall claims made, the government has not materialised any practical achievement in its first hundred days, which may be presented as a symbol of substantive reform and change the PTI has constantly campaigned for.”

The think tank said Imran Khan took office in August as Prime Minister amid various challenges faced by social, political and economic spheres in Pakistan. Accumulating debt, coupled with a rise in oil prices made the already poor post-election economic situation worse.

The situation was further aggravated with devaluation of rupees on account of rising imports bill, depleting reserves and circular debt.

Collectively these factors further exacerbated the current accounts crisis which witnessed a shortfall of nearly $18 billion by the time Khan took office.

“With this PTI started its first 100 days’ program that aimed to establish the right direction for Pakistan’s economy and society,” it added.

“Countries like Pakistan, facing a balance of payment crisis annually, are indicative of weak democratically elected governments at best.”

Prime said more than Rs14 trillion borrowed from international donors over a span five years from 2013-2018 was not translated into sustainable private sector activity. By failing to facilitate pro-business environment in the country that has been dominated by few multinationals, the government through public sector development programme remained the biggest contributor to economic activity within Pakistan, it said.

The Prime said improved civil-military relationship paved a way for the government to take tough economic decisions, such as “the recent choice of going to the International Monetary Fund for a bailout or introducing structural reforms that may irritate some, within the political class, benefiting from the status quo”.

“Civil-Military relationship did witness some distrust during the past years but, with PTI in government, the civil-military relationship showed visible improvements and PTI government should capitalise on this trust dividend that shall provide the government with more free hand to incorporate even tough choices in economic policy making,” it added.

The Prime, addressing the issue of state-owned enterprises, said the government may have to privatise these state-run organisations as per its vision of competition and private sector competitiveness in the longer run.