Confusion

There’s no team. There’s no vision. There’s no policy. How can there be any positive outcome for the country? Every project goes through four distinct phases: Phase I – Team creation. Phase II – Planning. Phase III – Execution. Phase IV – Results.

The PTI government – with more than half of its tenure already in the past – is still stuck in Phase I. How can there be any positive outcome? There’s confusion; there’s uncertainty.

The ‘division of labor’ has always been clear: the private sector produces ‘things’ and the public sector makes or changes policy. Pakistan’s private sector is producing ‘things’ but the public sector is neither making policy nor changing it. To be certain, there are at least two prerequisites to making or changing policies: a team and a vision.

Imagine: the fourth finance minister in 32 months; the sixth FBR Chairman in 32 months; the fourth chairman Board of Investment in 32 months; the fourth secretary of Commerce in 32 months; the third secretary of Finance in 32 months; and the third SECP chairman in 32 months. There’s no team. There’s no vision. There can be no policy. How can there be any positive outcome?

There’s more confusion. The IMF claims that the government has agreed to a revenue target of Rs8.8 trillion. The government is using Rs8 trillion in its calculations. The IMF claims that the government has agreed to a budgetary deficit of 5.5 percent of GDP. The government is using six percent in its calculations. The IMF claims that the government has agreed to a federal development budget of Rs627 billion. The government is using Rs800 million in its calculations. Collectively, that right there is more than a trillion rupees worth of confusion.

There’s even more confusion: the new finance minister must get elected within the next six months-or he won’t be the finance minister. Policy uncertainty and corporate investment are directly related. In 2007, Pakistan attracted $5.59 billion worth of foreign direct investment (FDI). According to the SBP, “FDI fell to $1.395 billion during July-March 2021.” And, when we are unable to attract FDI we run to take on additional debt. For the record: The PTI, from 2018 to 2021, took on gross external debt of $33 billion of which $18 billion was used to pay back previous debt and $15 billion was added to our external debt stock.

Confusion and policy uncertainty do two things: dampen investment and increase the cost of capital. For the record: Pakistan is now raising additional debt under the various Roshan Digital schemes by paying up to seven percent on dollar deposits and up to 11 percent on rupee deposits. On March 30, Pakistan borrowed $2.5 billion through Eurobonds by offering up to 8.875 percent (when the LIBOR hovers around 0.11 percent).

Confusion in Islamabad. Confusion in Rawalpindi. Confusion in the opposition. Confusion in the courts. Confusion in parliament. How can there be any positive outcome for the country? Confusion is a “state of mind brought on by uncertainty”. Confusion breeds three things: discontent, distrust and conflict. Uncertainty also breeds three things: stress, fear and anxiety. No wonder we have all six: discontent, distrust, conflict, stress, fear and anxiety.

The writer is a columnist based in Islamabad.

Email: farrukh15@hotmail.com Twitter: @saleemfarrukh