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May 20, 2019

Still not in the know?


May 20, 2019

As soon as the PTI came into power, it realized it had made commitments that were simply unrealistic. With pressure mounting for service delivery, the team soon realized that the challenges were simply out of its reach.

So from the PM down to ministers and parliament members, an easy excuse was found for non-performance: the previous two governments have left such an economic mess that it’s simply not possible to meet commitments made prior to elections. Also, that the PTI leadership did not know the degree of economic mess and only found out the scale once it came into power.

As time passed, this logic was aggressively used to hide behind its own incompetence. Every night at talk shows, you will see PTI leaders giving the same reasons. The events of last week are a great example. As the stock market tumbled with its worst performance in 17 years and our rupee got a battering in the open market, losing a staggering Rs10, the ruling leadership blamed the PML-N government for this complete economic meltdown. The PM repeats the same rationale day in and day out. The question then is: what was it that was not known to them? And, more importantly, why didn’t they know?

Coming from the ruling dispensation, it is extremely important to understand the rationale of this logic. That is why they need to clarify which part of the economy they didn’t know about before coming into power. What economic figures were not known or not clear?

During the period 2008-2013, the PTI had a fair representation in parliament including key positions in parliamentary standing committees such as finance, industries & production, Public Accounts Committee etc. As members of these important committees they had access to important information on our economy. In addition, regular briefings by high-profile persons such as economy related federal ministers, governor SBP, heads of public-sector entities, heads of regulatory authorities etc have been a regular feature of standing committees. Also members of parliament, especially those of the standing committees, could seek any information from any ministry or other government organizations. They had access to not just the current information but could also seek historical data in understanding the pattern of our economy.

As a major political party making a bid to win elections and form government, it was the responsibility of the party’s members of parliament to ensure they had full information and understanding of Pakistan’s macro-economic indicators. Without this important information, it was impossible for the PTI to prepare its economic plan as part of their manifesto.

Important macroeconomic numbers such as current account deficit, trade deficit, fiscal deficit, debt position, growth rates, foreign exchange reserves, tax revenues, annual development spending, current expenditure, etc are all known and available to members of parliament. Not just the broad numbers but even details are available. For example, with regard to the total debt position, the breakup in terms of domestic debt and foreign debt was readily available either from the Ministry of Finance or the SBP. The PTI leadership would also have known that total public debt at the end of the PML-N’s rule was Rs24 trillion instead of Rs30 trillion – a figure wrongly and repeatedly communicated by Imran Khan.

Similarly with regard to taxes, all information would be available including percentage of direct and indirect taxes, tax-to-GDP ratio, number of taxpayers in the country, the situation with regard to the FBR’s performance etc. The current ruling party leadership would also have known that tax revenues grew at 20 percent per annum in four out of five years of PML-N rule. They should also have known the international rating agencies views about Pakistan’s economy; the agencies had consistently improved Pakistan’s ratings during most of the PML-N’s rule.

The PTI should also have known the dynamics of Pakistan’s capital market and the reasons for it being ranked as one of the fastest growing stock exchanges in the world. They should also have known why Pakistan’s stock market got upgraded in mid-2017 from a frontier to an emerging market. Same is the case for the SBP policy rate which went down from double digits to as low as 5.75 percent (lowest in more than 40 years) over the PML-N’s five-year period.

What should also have been known were the challenges facing public-sector entities, for whose turnaround a plan should have been in place. Information about public-sector entities is readily available in the form of financial statements including balance sheets, income statements and cash flows. Another important area was the power sector. Again, all possible information would have been made available to them.

Perhaps in their zeal for opposition, the PTI leadership completely ignored the positives in the economy and in the process were ill prepared for the enormous task of governing the country. When the moment of truth came, they found themselves overwhelmed by the enormity of the task.

For them to say that they didn’t know the state of economy can be put down either to ineptitude or a denial of the truth. In either case, it reflects very poorly on the leadership. Also if they did not know the situation, what was the basis of their economic plan, including the very visionary ideas of five million housing units and ten million jobs?

So, now can the current government inform us what exactly was not known to them – and why?

The writer is former governor Sindh and former minister for privatisation.

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