Tuesday August 16, 2022

PTI vs PML-N: Some success for PTI govt on economic front

By Our Correspondent
June 01, 2021

ISLAMABAD: The economic performance of the incumbent PTI-led regime varies during the three-year tenure in comparison with the last five-year term of PMLN as official data shows that the N-League performed well on GDP growth, fiscal deficit including FBR’s tax collection and controlling inflation. Poverty had also come down during the PMLN led regime. However, the PTI led regime performed well on account of Gross National Product (GNP) in its third-year rule, converting Current Account Deficit (CAD) into surplus and attracting more remittances from abroad. But the incumbent regime failed to tackle rising inflationary pressures.

Now the economic performance of both the regimes is produced here and masses can judge their performance on the basis of hardcore numbers. The PMLN achieved provisional 5.8 percent GDP growth in the fiscal year 2017-18 but after PTI came into power, this growth figure was revised downward to 5.5 percent in finalised estimates. Now the PMLN claimed that it had achieved GDP growth rate on average 4 percent in the five-year term from 2013 to 2018. The PTI led regime achieved 2.1 percent growth in 2018-19, which got contracted to negative 0.47 percent in 2019-20 after eruption of Covid-19 pandemic and now the provisional GDP growth is estimated at 3.94 percent for 202-21. On average, the GDP growth remained 1.9 percent in the last three years, which was much below than average population growth of 2.4 percent on per annum basis in Pakistan.

The size of GDP during the PMLN tenure had touched $313 billion in 2017-18 but it fell in the first two years of PTI led regime and got slashed down to $263 billion in 2019-20. In the third year of PTI led regime, the size of GDP growth increased to $296 billion in 2020-21.

The PMLN exports stood at $24.8 billion in its last year rule in 2017-18 but exports reduced in the first two years’ rule under the PTI led regime in 2018-19 and 2019-20. The second year in 2019-20, the exports declined because of eruption of Covid-19 pandemic in the last quarter (April-June) period of 2019-20. Despite 35 percent devaluation, the exports could not move forward in the first two-year rule of PTI. This year, even though global trade in home textiles has increased by double digits, Pakistan’s exports after three years and huge devaluation will only surpass the level attained by PMLN of $24.8 billion by 1pc. In spite of all the narrative building, all the PTI will achieve after three years is a 1pc increase. In PMLN’s last year, exports increased by 13pc. The public debt rose by Rs10,000 billion in five-year term of PMLN and stood at Rs24,952 billion. If the total public debt and liabilities are included, then it stood at Rs29,800 billion till end June 2018. However, the public debt increased by 52 percent from Rs24,952 billion to Rs38,005 billion in the last three-year rule of PTI. If total public debt and liabilities are included, then it increased from Rs29,800 billion to Rs44,500 billion in the last three years of PTI.

The PMLN claimed that the PTI increased debt by over Rs13,000b in less than three years. That’s more than half of all the debt added by all governments in 71 years. The PMLN added Rs2,100 billion debt per year on an average and built power plants and motorways and CPEC, it further stated. The PTI is adding Rs4,300 billion per year and building nothing. Even the few but much publicised Langarkhanas are built by Seylani Welfare Trust, which also provides the food. The external debt has increased by $14.9b since June 2018 which the PMLN increased by $18 billion in five years.

On fiscal deficit, the average fiscal deficit was around 8 percent of GDP under the PTI led regime but it was standing at 5.6 percent of GDP. Total fiscal deficit stood over Rs10,000b in PTI’s three years versus Rs7,893 bn in PMLN’s five years

The PMLN doubled the FBR tax revenues from Rs1.9 trillion in 2013 to Rs3.8 trillion in 2018. For the PTI’s first two years, the FBR’s growth remained flat as it stood at around Rs3,850 billion. In the second year, the revenue collection was affected negatively because of Covid but in the first year there was no Covid yet the performance remained dismal. Now the FBR was achieving double digit growth in the first 11 months of the current fiscal year and it was hoping to achieve its revised target of Rs4,691 billion till June 30, 2021. But Imran Khan, when standing at container, had claimed that he would ensure the FBR collection doubled in the first year and it would be increased from Rs4,000 billion to Rs8,000 billion in one year. The tax to GDP ratio under the PTI, the true measure of tax collection efforts, has remained below PMLN’s number every year including this year. The SPI Inflation has consistently remained above 13pc every week since 25 February 2021. Food inflation has remained above 10pc almost every month for the last two years. In PMLN’s last year, inflation was only 3.9pc. Food inflation remained low throughout PMLN’s five years. The GNP growth remained over 6.5 percent in 2020-21 under the PTI and it was the second highest since 2004-5 whereas it was lower on average in five-year term of PMLN. The remittances remained highest ever absolute figure in the outgoing fiscal year that had fetched over $24 billion and projected to touch $29 billion mark till end June 2021. The current account deficit was brought down from deficit $20 billion into surplus so far in the current fiscal year. The circular debt was much lower under the PMLN but now it was moving towards Rs2,500 billion till end June 2021 despite raising power tariff several times.