Daily Times

Public policy pinnacles and its strings require a professional stir knowing the impact of every intervention either through word of mouth or administrative instrumentalities. For a developing country albeit in its lowest percentile as Pakistan is, germane of consciousness must revolve around economy. Decision making and process it follows require intense deliberations amongst those who are aware of impact assessment tools, however, unfortunately this is not the case in Pakistan. Common man of this country is suffering and there hardly appears any room for survival for even the middle class now. Socio economic issues have overshadowed the hope to live. Even a crude example relating to COVID wherein the public transportation has been allowed with 50% seat factor, however, this has been implemented on common commuter vans and buses and to cover the costs the service providers have doubled the fare, however, no such SOP is followed by Premium buses or even the Airlines wherein the seat factor touches 100%, hence all the SOPs and restrictions are for common and marginalized segment of the society.

With this backdrop, current economic and political challenges faced by Pakistan have adversely impacted every sphere of life especially common man.  The economic indicators are stumbling on downward slope continuously from past few years especially under incumbent regime. This is mainly a result of incompetence and coupled with lack of direction and vision. The current government has made frequent changes in its Financial team and in a short span of 2.5 years, Pakistan has witnessed four Finance Ministers, this has eventually lead to inconsistency in the decisions and policies adversely affecting strategic alignment at the policy level.

The landmark China-Pakistan Economic Corridor” (CPEC), which was officially launched in April 2015 while China’s president Xi Jinping visited Pakistan. Consequently, emphasis shifted towards power generation and infrastructure development in Pakistan with estimated investment of USD 46 billion. The two governments then drew up a “Long Term Plan,” starting in 2017 and drastically expanding the projected timelines for implementation up to 2030. This further enhanced the investment portfolio to USD 62 billion.  However, the pace of investment and execution of projects witness negative trajectory since PTI Government has been in office.

Aforementioned factors have eventually resulted in deteriorating fiscal condition of Pakistan and economic woes have further exacerbated. The GDP decreased by -0.4% in 2019-20, this is first time after 1952 that Pakistan witnessed negative growth in our GDP. Pakistan never reported this even in difficult times such as wars or flood or other natural catastrophes. This alone indicates volumes about gross incompetence to this government. However, as per latest Fiscal Policy Statement of 2019-20, the fiscal deficit of Pakistan has widened to 8.9% of GDP which is highest in last few decades. Whereas on the revenue collection side, the same is not encouraging and the sustainable growth is yet to be achieved. Our Tax to GDP ratio which was recorded as 12.9% in Financial Year 2017-18 termed highest since FY 1999, was reduced to 11.6% in Financial Year 2019-20 attributable to multiple factors including the policy shift and stir to the businesses. The current regime was supposed to increase the revenue with the ratio of 20% each year to maintain the pace inherited by the previous government, however, unfortunately, despite frequent politically motivated appointments in the FBR especially Chairman FBR, government failed to meet its revenue targets. The revenue collection targets were revised thrice in financial year last year. The government approached IMF to slash its revenue targets for current year as well. Similarly, the Foreign Debt which was recorded as 33% of the GDP at end of FY 2017-18 has blown up to 40% of GDP at end of March 2021.

Interestingly, recent tweet by Prime Minister Imran Khan was a great surprise for the nation when he disclosed that in the outgoing financial year GDP is expected to grow by 3.94%. He attributed this success as fruit of his economic policies while managing the pandemic. He further added that “Our V-shaped recovery is balanced between three major sectors — agriculture, industry and services”

The growth figure is above all earlier estimates by different local and international organizations. State Bank of Pakistan (SBP) had estimated GDP growth at 3%, and the projections of IMF and World Bank were between 1.3% and 1.5%.

These claims made by the government seem ambiguous. In past such type of claims proved wrong. In financial year 2018-2019 government claimed that GDP growth will be 3.3%, however, it was recorded as 1.9%. Similarly, in 2019-20 government published negative growth of -0.4% however independent analysts believe that it remained around -2%.  Another criticism is about the per capita income claim; it appears that government has used old data of population to present a bright side of the economy. In April 2021, the Ministry of Finance issued a Medium Term Budget Strategy Paper 2021-22 in which the GDP growth was estimated at 2.9% (RE) and interestingly after a month this number magically changed to 3.9% without leaving positive impact on the life of common man!

Present Government heavily relied on across the board accountability and elimination of corruption, however mantra of corruption is losing its charm as well and contrary to its entire claim, Pakistan in 2020 has slipped seven positions downwards on corruption perception index as compared to its position in 2018. Common man is finding it difficult to make it ends meet, when previous government of PMLN took charge the per capita income of Pakistani was USD 1,333 and by the end of their tenure it grew up to USD 1,652. Whereas in 2019-20 this number fell to USD 1,355 per capita, these numbers explain the inefficiency of the current regime which is badly impacting the life of common man.  The recent release by Pakistan Bureau of Statistics, the per capita income for 2020-2021 has been estimated at $1,543 during this fiscal year.

If these concerns are true, it depicts an alarming pattern where the government itself is involved in data manipulation and fudging to please its voters. This incumbent government is already accused of presenting false data to IMF and this issue was publicly raised by IMF, which resulted in an embarrassment at global level.

Another factor is the role of foreign investment which played vital role for the progress of any country. It at one hand helps in building sustainable foreign reserve and on the other side contributes to employment and revenue generation activities. However, it is an unfortunate reality that the foreign investments are facing a continuous decline in current regime, the foreign investment which was around USD 5 Billion in FY 2018 suddenly nosedived to negative 54.8 Million in FY 2019. However, FY 2019-20 it was reported around USD 2 Billion. This spell hasn’t lost its momentum and nine months’ figure for FY 2021 depicts a bleak picture of Foreign Investments and the data released during the period of July – March 2021 shows that investment declined by massive 52% as compared to the same period of last year.

On the foreign trade end, the government has made tall claims of recovery and SBP data shows that exports receipts for Jul-Apr 2021 show an increase of 7% as compared to same period in previous year. However, when this increase in export compared with PMLN final year figures, it shows 2% rise achieved after devaluating Pak Rupee around 35%. The government failed to grasp the concept that this can adversely impact commodity prices and resultantly this policy of currency devaluation has aggravated inflation. The statistics released in April 2021 shows that inflation in Pakistan reached at 11.1% a detail analysis of the data discloses the fact that Pakistan Bureau of Statistics changed the base year of the Consumer Price Index (CPI) from 2007-2008 to 2015-2016 to monitor inflationary trends in a more favorable manner.

Notwithstanding, half of the term is over, still the incumbent regime can capitalize by formulating short, medium and long term economic strategy with emphasis on cottage industry, export oriented IT industry, human capital export and incentives for large scale manufacturing. Besides this, being an agro based economy, innovative means for agriculture sector and interventions with export orientation will certainly help in reducing current account deficit. The need of the hour is that the government should come up with clean hands and transparent numbers so that public and all stakeholders can be taken into confidence about the current economic challenges, this will further enable government to reach a consensus on economic front which can be a game changer for Pakistan. Similarly, special emphasis on infrastructure development is greatly needed and the pace of ongoing projects has to be accelerated for long term sustainable growth. Furthermore, cost of doing business segment is presently out of sight and there appears a room that besides tangible efforts for provision of basic amenities for industrial base, tax system requires overhauling and automation at its maximum extent with minimal human interaction needs to be implemented.