PTI created hype in election campaign about corruption and mismanagement of economic issues. Impression was also given that the Party was fully capable and equipped to grip the situation and would provide way forward in the first hundred days if voted to power. Unfortunately neither in first 100 days PTI could give any clear economic direction nor in second 100 days except some cosmetic announcements. The launch of the ambitious Poverty Alleviation Programme EHSAS no doubt can be considered first significant programme but with empty treasury difficult to continue financing such a meaningful socio-economic uplift programme.
Being a most giving nation on the earth the society fill the gap of government contribution, otherwise its effects would be more serious than exist. The best known paths to overcome mass poverty and other economic pressures is the Chinese way of double-digit growth sustained over at least two decades to push people out of poverty and other economic pressures. In the past decade and half, growth in Pakistan has been less than the historic average of six per cent. Even this average was far less than the potential.
The latest United Nations report on world economic situation and prospects for 2019 says economic growth in Pakistan is projected to slow down markedly in 2019 and 2020 to below 4.0 per cent, after an estimated expansion of 5.4 percent in 2018. The country’s economy is facing severe balance of payment difficulties amid large fiscal and current account deficits, a visible decline in foreign exchange reserves and mounting pressures on the domestic currency according to the report released by the United Nations Department of Economic and Social Affairs.
The macroeconomic imbalances and financial insubstantialities pose significant risks of a future slowdown, which emphasizes the need extraordinary Policy actions to put it on the way of sustainable growth oriented economy. Pakistan economy is facing some serious long-standing challenges. To promote more sustainable medium-term growth, policymakers need to encourage the much-needed infrastructure investment to alleviate chronic energy shortages while addressing imbalances, particularly by promoting export growth.
The economic outlook in Pakistan is challenging, and it encompasses significant downside risks. The level of public debt is high, increase in consumer price inflation, shortfall in revenue collection, increase in electricity and gas tariffs, discontinuation of ongoing development projects, widening of fiscal deficit, increase in expenditures and unemployment are other severe challenges to our economy. GDP growth of two major sector of economy manufacturing and agriculture are reported in fast decline. A harsh monetary policy has already been announced and pushed the rate of interest double digit.
If further rate of interest increased it may undermine the incentives allowed in the second mini-budget and contradictory to party manifesto. Some measures seem to be taken apparently setting the pitch for a coming bailout package from IMF. Such actions are causes of increasing inflation and creating unrest in public. The historical reviews reveal that past governments always took steps to fulfil the conditions of loan granting agencies and never tried to work in real direction or requirements.
A serious controversy is also mounting on the 18th Amendment and NFC Award which need to be settled at the earliest. The major issues that require resolution and revision are vertical distribution between the Federation and provinces, and horizontal distribution among provinces. Another issue is to accommodate the financial requirements of what after the merger of ex-FATA is an enlarged Khyber Pakhtunkhwa (KP). Furthermore, the responsibility of providing social sector services as mentioned in my earlier article, rest with the provincial governments. As such the needs of the provinces must be addressed first before launching any federal program.
The country needs a comprehensive and integrated economic policy, planning and implementation strategy to restore economic stability and inclusive growth. But all these depend with a good team which is not done so far. Imran Khan’s ability to select a team is under debate; although he has limited choice to pick political team as has to pick from elected lot of own and allied parties, but can pick the competent persons for administrative slots. He should give preference to professional capabilities, dedication and honesty over political compromising in picking administrative positions. A surgical strike or operation is very much needed immediately in every economic field to set economy on right track. PTI government should not forget that inflation, utilities prices and unemployment can flare-up public any time like increase of Rs 0.25 (25 paisa) in sugar price in Ayub Khanregime.
—The writer is ex-Chief, Planning Commission of Pakistan.