PTI government came into power with the promise of turning around the economy. But it is experiencing an economic crisis after first 10 months of its rule. The GDP growth rate has almost fallen down 50% compare to the last year. The GDP growth rate has come down to 3.29% from 5.8%. This is the slowest GDP growth rate since 2010 when economy grew at the rate of 2.64%. The target of GDP growth rate for the current year was 6.2%. The per capita income in dollar terms has dropped over 8pc to about $1,515 from $1,650 last year mainly because of the depreciation of Rupee and slowdown of the economy. The size of the economy has shrank as the GDP, in dollar terms has also come down from $313bn last year to $280bn.
PTI government has showed dismal performance on the economic front in the first year of its rule in the country. The agricultural output growth is 0.85pc against the target of 3.8pc. The industrial sector is growing at 1.4pc against the target of 7.6pc while the services sector’s growth rate of 4.7pc is less than its 6.5pc target. All major sectors of the economy have slowed down under PTI government. Both agriculture and industrial sectors have been significantly slowed down.
The government has failed to meet investment and savings targets. The investment-to-GDP ratio has dropped to 15.4pc against the target of 17.2pc. The savings-to-GDP ratio stood at 11.1pc in 2018-19 against the target of 13.1pc. the inflation is inching closer to 10% mark.
PTI is doing everything in the power that it opposes in the opposition. Yet it failed to stop the fall of economy. PTI has failed to deliver its promises so far. The government policies have failed to produce the desired results.
The issues of planning, policies, capacity, preparations, homework and capabilities of the PTI’s economic team can be blamed for this lackluster performance. The lack of understanding of deep- rooted economic problems and in-decisions to address the issues also attributed in this economic fall. For instance, it took PTI government many months to approach the IMF for a bailout package. If decided earlier it could have saved precious time and also prepared well in advance before presenting its first full budget. The delay in the decision caused lot of loss to the economy.
It seems that PTI’s promises and rhetoric were based on myths and misconceptions rather than based on concrete plans and ground realities. It is important to fully examine these misconceptions and myths to understand the PTI’s failure. PTI leadership was overconfident and arrogant and thought that they know everything and will fix the problems without much trouble.
They seriously thought that their honesty and clean image is enough to fix the economy. They lacked the serious preparation and home work to immediately the problems. It set wrong priorities to begin with. The mere rhetoric and slogans of selective accountability backfired. It dips the business confidence in the business community. The business confidence plummeted to the lowest levels.
The first misconception was that the industrialists, big business, big traders, feudal lords and rich elite did not paying the tax because the corrupt leadership of PPP and PML-N was in power. As soon as the clean and honest leadership of PTI will assume power, there will be queues to pay taxes. The reality is that there are no queues outside the FBR offices to pay taxes and registered as tax payer. Instead, the tax collection has fallen in the first 10 months of PTI government. The short fall in the revenue is around RS300. Tax collections and revenue generation will not increase without the reforms in the economic structure and tax system.
Second misconception was that PML-N and PPP were running the government with heavy borrowing and misusing the debts. PTI leadership including PM Imran Khan was used to think that their government will not take loans. Now the PTI government in last 10 months facing the stark reality of economic situation and continue to borrow money to keep the boat afloat. PTI government is borrowing like there is no tomorrow. PML-N was borrowing RS7.5 billion per day but PTI is borrowing RS15 billion every day.
If this trend continued , the IMF has projected that Pakistan’s debt will swell from 72.1 percent of the GDP, left behind by the PML-N government in 2018, to 84.1 percent of the GDP and the fiscal deficit of 7.6 of the GDP by the end of Prime Minister Imran Khan’s tenure in 2023. Against a debt of Rs11 trillion piled up by the PML-N government in five years, the Imran Khan government would end up adding Rs5 trillion of debt in its first year.
Imran Khan has been repeatedly quoting Rs30, 000 billion figures of Pakistan’s total debts and liabilities to assert that due to the corruption of PML-N and PPP government, the country has been put under such a heavy debt burden. After coming into power, he also announced to do the forensic audit of the huge borrowing of almost Rs24, 000 billion during the last ten years of PPP and PML-N tenures, to ascertain in whose pockets this money had gone. But nothing has happened so far.
However, during the last nine months of the present fiscal year, the government borrowed Rs3, 300 billion only from the State Bank of Pakistan, which is far more than before. It means that borrowing of PTI government has been more than double of what was the situation during the last PML-N government.
The third misconception and myth was that the PTI government will go after the corrupt elite and all those corrupt politicians who had stashed the looted and plundered money in the foreign banks and properties and will bring back the ill-gotten money back. The former finance minister Ishaq Dar floated the figure of $200 billion stashed by the Pakistanis in foreign banks.
The PTI believed this figure correct and build up its claims to bring back the looted money back to ease the financial pressures. But it was myth than a reality. Not a single penny has been brought back by the PTI government in last 10 months. The PTI had also opposed amnesty scheme launched by the PML-N government and termed it beneficial for tax evaders, looters and plunderers.
The fourth misconception and myth was that As soon as PTI government will take office, there will be long queues of rich Pakistani expatriates and international investors to invest in Pakistan. There was general believe in the PTI that Imran Khan is widely trusted by people both inside and outside the country. So it will help to raise money from Pakistanis living abroad and to attract the international investors. The lackluster response of Pakistani diaspora towards Dam fund and Pakistan bonds exposed this myth and misconception. There is no rain of Dollars, Euros and Dirhams so far. The foreign direct investment has decreased 52% in the first ten months of PTI government.
The economy cannot be fixed on misconceptions and myths. Economy needs concrete policies and strategies to stimulate growth and development. PTI government needs to realise the economic realities and adopt the policies accordingly.
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13 November, 2019