PTI bad policies land Pakistan in economic strife: Miftah Ismael

LAHORE: PML-N leader and former federal finance minister Miftah Ismael has said the PTI indecision coupled with bad policies has landed Pakistan in a severe economic strife and the budget shows that this government is incapacitated to recoup the drowning national economy.

In a video statement, he said there is no doubt that the new coronavirus caused economic slowdown in Pakistan, like it did in the rest of the world. But Covid-19 economic damage to Pakistan was worse than any other country because the national economy was already in a nosedive because of the PTI blunders even before the pandemic.

"Blame and cuss the PMLN all day and night. But at least do your basic job of going to the office and collecting taxes. Find ways to reduce expenditure. Dismissing the 18th Amendment as impractical black law is unreasonable. Even if the government wants some amendment to it, it can be discussed for consensus, but that is irrelevant unless the PTI starts doing its basic job of revenue collection," Miftah said and added the PMLN government increased annual National Tax Revenues by 14.5 per cent.

He said considering that the PML-N left the revenue collection at Rs 3,840 billion, continuing on the same pace of 14.5 per cent increase, the tax revenue should have been Rs 4,400 billion. But despite adding Rs 700 billion new taxes and withdrawing income tax concessions given

by the PMLN, the PTI finance minister could otherwise even achieve the previous year's target collected by the PMLN and fell short of Rs 3,840 billion after setting themselves a target of Rs 5,500 billion, he pointed out.

He said had the PTI government managed to even continue the speed of revenue growth being practiced by the PML-N, they could have collected Rs 5,000 billion. He said a major share of the tax revenue comes from ports through imports. He argued that it is a misconception that the tax revenue shrank because of a decrease in imports. Although the PTI decreased imports by 10 per cent, that decrease was in dollars. Whereas due to the 30-40 per cent devaluation of the rupee, there was a net 20 to 30 per cent increase in the import revenue in rupees, he explained. He said the government has now set itself a target of Rs 3,908 billion in which Rs 100 billion have been added to grants from FBR collections, which means the true target set for this year is Rs 3,809. This, he said, is even less than what was collected by the PML-N government without 35 per cent currency devaluation.

The former finance minister said the economic slowdown under the PTI government is because of marked reduction in large scale industrial and agricultural production and has nothing to do with the current account deficit. He said the government would need to pay around Rs 2,800 billion in interest on domestic loans this year. This means the government will pay Rs 1,500 billion more due to its interest rate increase blunder. The amount of Rs 1,500 billion is more than Pakistan's defence budget, revenue budget and development budget, he pointed out. But the government does not seem optimistic about lowering interest rate as it has earmarked Rs 2,900 billion for the debt interest already, he said.

Miftah pointed out that the PTI government has increased Pakistan's total public debt by 50 per cent in less than 2 years. According to the State Bank of Pakistan, When the PPP left power, the debt was Rs 14,292 billion; when the PML-N left government, it was Rs 24,953 billion. The PTI has added Rs 10,254 billion to public debt in less than half of its term by March 2020. By the end of this month, the public debt will be Rs 37,000 billion.

Talking about the GDP growth, he said had the PTI not dented manufacturing and kept the PML-N's 5.8 GDP growth going, the Covid-19 economic fallout would have decreased it by 1-2 per cent. But because the PTI policies reduced the GDP growth to 1.9 in its first year, it has now plummeted to - 0.4, which experts say will be - 1.5, he pointed out. Budget for a country in negative growth is entirely different from the budget under normal circumstances. But this budget by the PTI in no way reflects that. The government has further cut the already slashed PSDP from Rs 700 billion to Rs 650 billion, whereas with negative growth, it should have increased it, he said. Increasing the PSDP and starting development projects to re-employ workforce rendered jobless due to factory closures was a crucial opportunity missed by the government, he opined.

He said the growing deficit is one of the most worrisome issues. The PMLN left the budget deficit at 6.5 of the GDP while the PTI has jacked it up to 9.1 and there is high likelihood of it going into double figures which is catastrophic for the country. He said these measures by the PTI led to suppressed demand and reduction in consumption but the government did not even try correcting that with a reduction in income tax or GST to boost demand and public expenditure.