Thursday May 23, 2024

The crisis deepens

By Mohammad Zubair
February 19, 2020

There has been a huge failure if we see what was promised before the elections and what has been delivered. What led to such a catastrophic failure and within such a short period of time?

The following questions may help us understand why this was always bound to fail: one, was there an understanding of the serious economic and other challenges confronting Pakistan? Two, was the economic plan too simplistic considering the complex issues with regard to economic growth, inflation, unemployment, poverty, education, healthcare, taxation etc? Three, did the PTI have a competent team with the vision and capacity to handle such complex issues? And four, what about the leadership itself; did it have enough experience, foresight and understanding of Pakistan and it’s many challenges?

It is now clear that the PTI leadership never really understood the complexity of the economic challenges facing Pakistan. They were only interested in accusing political opponents and making fun of the then party in power. Whenever the previous government took difficult decisions like increase in prices, it was attributed to mismanagement and corruption. Wasn’t this naive and childish? But this was not just public posturing; what is more dangerous is that they actually believed so.

And this brings us to our second point: was the economic plan too simplistic? Yes it was not just simplistic but it also lacked any foundation in reality. No professional work was involved in coming up with the economic plan. For example, the commitment to providing one crore jobs or 50 lakh housing units was absurd.

The entire plan was built around one focal point – Imran Khan is sincere and has credibility, and only this factor will ensure economic turnaround. People believe in Imran Khan and therefore will line up to pay taxes or overseas Pakistanis will start sending millions of dollars. And the billions being looted and plundered simply not happen because the ‘looters and plunderers’ will no more be in power.

Did the PTI have a team good enough to manage our complex challenges? Except for a few individuals, the party never had competent people in its team, especially those with a strong economic or financial background. A look at the present cabinet will confirm this point. Most economy-related ministries are held by non-PTI people. The most important financial decision-making forums are headed by Mr Hafeez Shaikh who was not part of the PTI team nor shares the philosophy of Naya Pakistan.

On several occasions before the elections, Imran Khan was asked about the composition of his team in case he wins the elections. He always maintained that his cabinet will be the best in our history. Wonder whom he was referring to. That myth was badly exposed once the cabinet was formed.

Imran Khan was a national hero following his cricketing exploits. His reputation was further enhanced when he singlehandedly managed to set up the Shaukat Khanum cancer hospital. He was rightly idolised. He carried that positive momentum when he entered politics. But that’s where the problem started. Performances in the cricketing field and social sector were considered by his supporters as enough evidence of his leadership qualities. Simply stated, he had no experience before being elevated as the PM. No one doubts his sincerity but the issue is that statecraft is completely lacking.

In addition to the pre poll commitments, plans and team composition, one question that is being debated is whether the current government is responsible for the current economic mess.

Any government after 18 months in office has to own responsibility for the state of affairs. It has to be answerable for the decisions it took over the last 18 months. Following are some of the key decisions by this government which have had a very negative contribution towards the present economic meltdown: massive devaluation; doubling the interest rate; imposing extremely high taxes; and an unprecedented increase in gas and electricity tariffs.

No business, big or small, can absorb the cost implications resulting from the above decisions and that too within a short span of one year. Double-digit inflation was the only consequence of these poor decisions. Combined with low growth, this had devastating implications for our economy – such as mass-scale unemployment, pushing millions below the poverty line, closure of businesses, profit erosion and an overall dismal economic environment.

In addition to the above factors, the overall poor governance which was highlighted in the recent wheat and sugar shortages, the infighting within the party and with its coalition partners – all have contributed to the economic mess.

If the present government was thinking that these actions will not result in unprecedented price hikes, then they need to brush up their basic economics.

The government’s response in the form of more subsidies through utility stores is difficult to contain the inflationary pressure. This might help in the short term but prices can only be brought down if economic activity picks up, production increases, better results are obtained from various agricultural crops, there is improved governance, better coordination between the provincial and federal governments, overall improvement of the power sector. These are some of the measures that can ease inflation over a period of time.

With massive revenue shortfall and record expenditure, the fiscal deficit is expected to be above nine percent – a record over the last 50 years or so. Add to this the record debt accumulation and we have an economic situation which is simply unsustainable.

The hopes of the millions who believed in Imran Khan and Naya Pakistan seem to have crumbled much faster than expected. The present is bad but the future is looking even bleaker.

The writer is former governor Sindh and former minister forprivatisation.