Wednesday February 28, 2024

A consistent list of failures

July 03, 2020

The writer has served as federal minister for finance, revenue and economic affairs.

The PTI government started with much fanfare after an election marred by controversy. Pakistanis of all political persuasions were hopeful that it would bring about improvement in governance and living standards. Yet after a period of two years even its most ardent supporters are now disappointed by its string of failures.

One reason for the current government’s failure is the false premise on which it was elected. Imran Khan’s central thesis was that all politicians, save those in his party, were corrupt and that corruption was the only thing holding Pakistan back. All Pakistanis had to do was give him power and they would see “dollars raining from the sky”. He further claimed that he was not just the only non-corrupt politician, but also the most capable leader, with a team of experts the country had never seen, who would help him govern.

Moved by the PTI’s intoxicating election promises and aspirational tabdeeli songs, people were made to forget that hundreds of millions of trees were missing from the ‘billion tree tsunami’, that not one out of the promised 300 dams promised in Khyber Pakhtunkhwa was built, that while PTI leaders criticised the PML-N for not building enough hospitals or colleges, they hadn’t built a single hospital or university in KP, and that most of their leaders had switched political parties more often than a chameleon changes its colours.

But in those heady days all this was forgotten. All we remembered was that the Dutch (or was it the Danish?) prime minister rode a bicycle to work, the British prime minister had question hour, the Gulf countries ran very efficient state-owned airlines, Bangladesh’s exports grew rapidly, taxes on petrol go straight to the pockets of prime ministers, tax amnesties were only offered to favour cronies of those in power, senior bureaucrats and police officers should not be transferred on a whim, a strong, patriotic Pakistani leader would isolate Modi and help the Kashmir cause, and on and on – ad nauseam.

However, now that the rubber has hit the road the list of the PTI’s broken promises, U-turns, venality and abject incompetence has come as a rude shock to the nation.

The first delivery from this government came in the shape of medicine prices rising way beyond inflation or devaluation. The health minister was changed and a promise made that prices would be brought back down. The nation still awaits.

Next we heard that polio cases, which had been reduced by the PML-N government to eight cases in 2107 and to only three cases up to July 2018, with international agencies predicting an end to polio transmission, grew back to 153 cases in 2019. The polio prevention programme had been seriously set back.

Dengue fever spread quite fast in Punjab in 2010. In order to combat this, Shehbaz Sharif pushed hard at the Punjab bureaucracy, starting his first dengue meeting everyday at 6am. He pushed private labs to reduce dengue test charges to Rs90 so people could afford it. In the end dengue was controlled and prevented from coming back for the reminder of his time in office. During Usman Buzdar’s first year in office, dengue returned and only ended when winter brought an end to the mosquito breeding season.

It is depressing yet emblematic to look at the Peshawar metro. Two years into the PTI’s governments, with cost escalation of more than 100 percent, we are still waiting for it to open. The Orange line in Lahore and the Green Line in Karachi, both of which were just a couple of months from completion when the PTI came to power, are still not operational. As Ghalib said “kaun jeeta hay teri zulf kay sar honay tak”.

In December of 2018, the PTI chose not to import LNG which resulted in forced loadshedding. Perhaps as a result, the petroleum minister was transferred to the aviation ministry. Again this year, the government stopped companies from importing petroleum products in April despite firms warning that the country will run out of fuel. In June, the government brought the petrol prices down but couldn’t manage supplies. And then four days before the month ended, it raised prices by 33 percent or Rs25 per litre. Today for every hundred rupees you spend on petrol, Rs45 goes to the government. Presumably now it doesn’t line anyone’s pockets. (I am sure it doesn’t. But the government should have the moral courage to say it was wrong then to make accusations and that the tax does go into government coffers).

Recently our aviation minister announced that hundreds of our pilots have fake licenses without probing the matter thoroughly and without urgently taking any remedial actions. The results have been predictable. So far, the EU and the UK have banned PIA flights from coming in, and Pakistani pilots working as far away as Vietnam have been grounded. The government isn’t done yet. Just when markets are down worldwide, it wants to sell off Roosevelt Hotel in New York, PIA’s biggest and profitable asset. I am a firm believer in Hanlon’s razor, which stipulates that “never attribute to malice that which is adequately explained by stupidity" but sometimes the current government’s inanities make you wonder.

The government’s contradictory pronouncements on Covid-19 betray a shallow understanding of the issues. Yet these pronouncements and measures are announced with a confidence bordering on recklessness. From Taftan (where healthy people were first infected and then let go all over Pakistan) to allowing the Tableegi Ijtema in the middle of a pandemic to the (now abandoned) quarantine centre in Lahore, the party in power has displayed utter ineptitude and a lack of purpose, despite getting considerable help from other institutions.

But I think the most dangerous failure has been in finance. The easiest way for a government to increase tax revenues is to devalue the currency and create inflation. For a country like Pakistan, where about half of all taxes come from the port, an increase in rupee value of imports (which occurred under the PTI government) due to devaluation leads to an automatic increase in tax revenues. Moreover, given that much of our taxes are indirect and imposed on goods, inflation also automatically brings in more withholding, sales and excise taxes. Yet in two years, the government has failed to increase revenues. And this in spite of imposing Rs1000 billion of additional taxes. Plus of course even exports have decreased, even after a 40 percent devaluation.

Then there is the State Bank whose interest rate policy has been a boon to foreign investors and has left government finances and industry reeling. Recently, the SBP reduced its discount rate by one percent but a day before they were decreased, the government sold Rs121 billion worth of long-term bonds at higher interest rates. Hence, we will be paying extra interest on bonds for the next three to twenty years.

Many supporters are dejected by the PTI government’s misgovernance and the inability of its leaders to transform themselves from rabble-rousers to statesmen and women. In fact the language of some of the leaders suggests that they are doubling down on their track record. And a sorry record it is.

Twitter: @MiftahIsmail