Daily Times

Imran Khan has claimed victory amid accusations of vote manipulation by the main opposition parties in an election that was predicted to be the “the dirtiest, most micromanaged and most intensively participated polls in the country’s history” by the Human Rights Commission of Pakistan (HRCP). The jury is out on whether this is actually the case.

Imran Khan’s maiden speech as ‘incoming prime minister’ holds a promise that he can make the transition to a statesman from a polarising and controversial politician. He hit on some right notes in a refreshingly humble and conciliatory tone. He began by addressing the state of the weakest and most underprivileged citizens in Pakistan, citing well-known statistics, moving on to widespread dissatisfaction with governance and the weak state of the economy. His declaration that he would not use the palatial prime minister’s house and put the mansions occupied provincial governors to use for public purposes will strike a strike a chord with the people who, he rightly pointed out, are averse to paying taxes because government finances are abused by the ruling elites.

Initial reactions to Imran’s speech have been positive, but his first 100 days as prime minister will be closely watched. He has raised great expectations among large segments of the population. Is he ready to deliver?

Imran apparently sees no contradiction between describing the caliphate from the early days of Islam as his model of a welfare state and sending a team to China to learn how China lifted hundreds of millions out of poverty in a few decades. This betrays a crucial weakness. If after a 22-year journey in politics, he feels the need to send a team to China to learn about their development strategy, it is hardly impressive. A popular TV channel today ran a news item drawing parallels with late Zulfikar Ali Bhutto and his populistic politics. However, this is where the comparisons stretch. Bhutto had a very clear reforms agenda, no matter how controversial or otherwise, which he implemented within his first 100 days in the office. Imran seems to still be searching for one.

Imran apparently sees no contradiction between describing the caliphate from the early days of Islam as his model of a welfare state and sending a team to China to learn how the People’s Republic lifted hundreds of millions out of poverty

Pakistan faces daunting economic challenges and the new government will have to get on with the job as the foreign exchange reserves drop and growth stalls. One international paper recently commented,

“If Khan’s thoughts on extremism and militancy are dangerous, his solutions for Pakistan’s economic problems are childish: elect better leaders (i.e, Khan), put corrupt politicians in prison and recover their “looted” wealth.’ Imran made no mention of looted wealth in his speech and instead promised not to carry out political victimization and start accountability with himself and the cabinet.”

Imran’s government will need to move quickly beyond rhetoric and populist prescriptions discussed in the drawing rooms of the urban middle class forms his core support base. Here are some reality checks:

The state bank has just $9.1 billion worth of reserves, insufficient to cover two months’ worth of imports. Pakistan has few options but to go to the International Monetary Fund (IMF) for yet another bailout. The IMF will ask the government to curb spending and cut the budget deficit. The new government will have to cut development spending, which will leave little room for any increase in welfare spending.

Expanding the tax base is easier said than done. Contrary to the popular perception that people don’t pay taxes, it is the actually the richest who avoid paying taxes. According to the Pakistan Economic Survey 2017-18, tax exemptions to various affluent businesses amounted to Rs541 billion. If the PTI government withdraws these exemptions granted by the “corrupt” Nawaz Sharif, it will face a backlash from the powerful businesses in Punjab and Karachi.

Given the ground realities, the policy options are difficult and demand a full reappraisal of the fundamental issues and formulation of a comprehensive reforms programme. While there is a broad consensus that we need to cut fiscal and current account deficits, and increase investments, the challenge is to come up with a comprehensive response because the time for piecemeal solutions is up. Although there is no choice except to borrow from the IMF to finance the current deficits, this is not a sustainable strategy.

It is an established fact that a democratically elected government’s best time to introduce difficult economic reforms is around the beginning of its tenure, especially during a crisis period. It takes time to formulate and implement a programme. Does Imran Khan have one beyond sending a team to China to learn about its growth miracle?

The writer is an analyst and an independent consultant

Published in Daily Times, July 28^th 2018.