Disarrayed priorities, disowned promises

LAHORE: The current ballyhoo of an economic upturn sounds doubtful as instead of working out a well-thought-out plan for long-term stability, the government is tunnel-visionedly trying to manage the economy by pulling together dollars from wherever it can.

No step had been taken to ensure merit and strengthen institutions.

One can’t help but wonder to see government mouthpieces all over the media boasting about economic upturn amid stagnant revenues and mounting expenses. By the way, the budget deficit is likely to overshoot the target by an alarming margin.

The appetite for loans, both local and foreign, is heightening with every passing day. Jobs are being shed instead of created. Logic dictates the poverty is on the rise at an alarming rate. Nothing is being done for that.

That Pakistan is an elitist economy is beyond dispute, but it seems the clout of that powerful lot is likely to gain more might because of the prevailing policies.

This government is ready to subsidise industries in order to make them competitive instead of removing the hurdles that have made them inefficient.

On the other hand, this regime is critical of Lahore Metro Bus service’s getting a Rs10 billion subsidy for providing 1,25,000 low-paid commuters a world-class service. The workers through this service save three hours of commuting time from home to work and back daily at an extremely low fare.

Every government in Pakistan makes political compromises and none as of today has governed the country transparently.

Still, when compared on the basis of global creditable rating agencies’ performance reviews, we find the previous government was doing better than the one in the power. The blunders committed by the present regime are being conveniently pinned on their predecessor.

The previous government through prudent management ensured a dollar-rupee parity that was in favour of the economy. It is said that Ishaq Dar used $2 billion to shore up foreign exchange by buying it from open market to keep the rupee stable.

Not only this government, but also the caretaker setup reduced the rupee value from Rs118 to Rs139 against dollar. It added Rs1890 to the foreign debt, which even at current dollar value of Rs139 is equivalent to $13.57 billion.

This convincingly makes it quite clear as to who was more pragmatic. Saying that this government is under so much pressure because it has to retire $13 billion foreign debt, amassed by previous regimes, is simply an excuse to run away from responsibility.

The previous regime also inherited a huge debt of $7 billion that it had to retire in a year. It did get a similar boost of Rs2 billion from Saudi Arabia and negotiated a program with International Monetary Fund (IMF) under which it was to get around $500 million every three months. Still everything was managed prudently and Pakistan never defaulted. This government invited trouble by going around countries telling them of our desperation that increased the cost of borrowing.

The present regime thoughtlessly borrowed dollars from wherever it could and at whatever markup they were given. Only the markup cost of the loans that this government has taken up so far (or is about to take) will be over Rs50 billion at a rate of 4 percent only.

It has already received $3 billion from Saudi Arabia, $1 billion from UAE with another $2 billion to come in a month or two, $500 million from China and is availing a $3 billion deferred payment facility on oil import.

All these loans are consumptive loans and will not be generating any income down the line. It has been reported that we are also negotiating a $5 billion loan with China at a markup of 6-7 percent. Some say that the interest and loan management of this amount will be the responsibility of the State Bank of Pakistan.

Will the arrangement come for outside Pakistan? Moreover, we are expecting a huge investment from overseas Pakistanis through Pakistan Banao Certificates, where the markup offered is over 6 percent. Does the economy have the capacity to absorb and payback these loans?

The energy and time wasted on securing such mammoth loans could have been diverted towards strengthening state institutions and eliminating corruption.

The corruption in the country is at the same level as it was a year back. The power line losses that in fact are due to theft have increased instead of declining. The outstanding power dues are also on the rise.

These dues relate to the power bills that have not been paid. The amount is reaching Rs1 trillion. Police reforms are even being rolled back in Khyber Pakhtunkhwa, while in Punjab the force is more politicised than ever.