In his first address to the nation as the newly elected Prime Minister, Imran Khan won the hearts of many Pakistanis. He spoke directly and with sincerity about a wide range of issues that he intends to fix as the PM. The list of issues that the new PM has highlighted was long: a failing judicial system, expat Pakistanis stuck in jails, green cover in cities, water scarcity, pollution in Karachi, maternity health, tourist potential, a crackdown on child sex abuse and of course sending children back to schools. Khan also mentioned the private schools that increase their fee without prior notice. Basically, most middle and lower class issues were covered like never before.
Khan’s intentions to implement an austerity programme must have warmed the hearts of his voters who have been complaining of VVIP culture and the wastage that the federal and provincial governments are identified with. As before, the idea of an Islamic welfare state was a central theme. With all the good intentions, a hint of naiveté about the economic situation could not be missed from Khan’s heartfelt speech.
Pakistan’s trade deficit has widened to over 33 billion dollars in the last one year. The Pakistani rupee has hit a record low against Dirham and is at Rs124 against the dollar, again an all-time low. Pakistan’s External Debt increased to 95097 USD million in the second quarter of 2018 from 91761 USD million in the first quarter of 2018.
China has partly bailed out the country and the Saudis are also stepping in to help their partner. All of this suggests a dire economic situation that needs to be dealt with in the months to come.
The new finance minister has already indicated that the country will seek a bailout from the IMF. While Khan in his address lamented that it was dishonourable to seek money from abroad, it seems that his government will have limited options in terms of debt repayments. Bringing money from the expats is a good idea but it will not happen overnight until the conditions for investors and economic indicators improve.
IFIs such as the IMF impose restrictions on public spending, and this will be a major impediment in Imran Khan promise of creating a Medina style “Islamic welfare state”.
Very soon, the new Finance Minister will have to manage repayments worth billions of dollars. The PM has announced the creation of a “task force” that controls departmental leakages as clamping down on corruption may not be sufficient to achieve these goals. In short, the reality of Pakistan’s broken economic and administrative system will hit good intentions sooner than later.
Notwithstanding these bitter realities, it is good to see that our PM is aware of the serious human development deficits including malnutrition and millions of kids who are out of school. Also heartening was the emphasis on climate change, which has not received the due attention in the recent years.
We wish the new government all success in meeting these formidable challenges. *
Published in Daily Times, August 20th 2018.