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You are here: Home»Home»BR Research»Pakistan Macroeconomics»Political economy & socioeconomics»Three year report card – where is the progress?


Just about three years ago, the PPP and PML(N) agreed to form a coalition on the basis of what was then termed, “a common agenda”. Today, the marriage of convenience has been conveniently turned into a divorce.

The walking out of PML(N) may have several motivations and implications best left for pedantic political analysts to peruse over and over again. But one motivation simply stands obvious: ‘a fragile economy and the threats it faces – with which the PML(N) would not want to be associated.

Nobody could accuse the PPP government of inheriting the economic mess it did it three years ago, but they have not done much to address them either.

It took the government three years and three finance ministers to rationalise the size of the cabinet – and that too only when it faced threats and ultimatums from its coalition partners.

It also failed to reduce the current expenditure and increase taxation through RGST and by bringing more people in the tax net. As a consequence, fiscal deficit remains dangerously high, whereas inflation remains in double-digits.

 

PPP’s Economic Manifesto

Delivery thus far…….

Sound Debt Policy

Domestic debt has increased by more than Rs2100 billion b/w FY08-todate, whereas external debt has jumped by $12 billion

Containing Inflation

CPI still in high double-digits

Establishing a Fair Tax System

Farming still untaxed, any additional burden is on the salaried class, RGST not yet implemented

Private Sector as an Engine of Growth

Credit supply to private sector choked; LSM index yet to reach pre-crisis levels

Development

PSDP spending has been repeatedly slashed – threatening future growth

Growth-inducing Transport Infrastructure

Really?

Ensuring Energy Infrastructure

Nothing tangible has been materialised as yet; not Iran-Pakistan gas pipeline, nor LPG projects

Source:  Ministry of Information.

Source: SBP, FBS and media reports

Energy shortages and the circular debt still remain as the biggest problem, despite all the promises to end it by December 2009. The manufacturing sector is barely producing, and with it, unemployment is looming large.

Indeed there have been some positive developments such as the programmes to introduce targeted subsidies, through the BISP, and the usage of branchless banking channels to provide ration to the flood and Swat-operation affectees.

But even the good steps are either found wanting in implementation or otherwise require a strong follow-through that has largely been absent.

For instance, the transition towards farming and rural sector growth is commendable, considering that a majority of the population is associated with that segment. However, the efforts to ensure that the farming and rural sectors pay taxes, or the efforts to at least document their economy have been missing.

The NFC Award and the 18th Amendment may pluck the right notes for reforms. But the problem, as always, has been found be in the follow-through, given the dearth of capacity with the provinces.

Central to all this perhaps, there is one single-most pervasive problem. Found in abundance in most government offices and behind major policies, it is the lack of altruism. If anything, it is in fact quite the opposite – quite well-demonstrated by the Hajj scam along with other corruption schemes.


 



 
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Annual2012/13
Foreign Debt $60.9bn
Per Cap Income $1,368
GDP Growth 3.6%
Average CPI 7.5%
MonthlyFebruary
Trade Balance $-1.433 bln
Exports $2.167 bln
Imports $3.600 bln
WeeklyApril 14, 2014
Reserves $9.713 bln