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The Pakistan Tehrik-i-Insaaf (PTI) government's dismissal of Pakistan Democratic Movement's (PDM's) plan to oust it from power through a series of protests culminating in a march to Islamabad in January 2021, based on its own failure to oust the government in 2014, maybe valid; however the Khan administration would do well to look into PML-N's more serious allegation of considerable damage to the economy as a consequence of the 14 August to 17 December 2014 very well attended dharna (sit-in) on Constitution Avenue.

The PML-N's litany of the 2014 dharna's negative implications on the economy centered on the postponement of Chinese President Xi's scheduled visit to Islamabad which the then government contended led to the delay in signing projects under the China Pakistan Economic Corridor (CPEC) with consequent delays in starting: (i) power sector projects (with the productive sectors remaining hostage to a massive electricity shortfall for that much longer), (ii) road projects leading to more expensive transport of perishables from farm to markets and of export consignments and imports from and to our ports, and (iii) rail projects. President Xi finally visited the country on 20 April 2015 and signed over 46 billion dollars worth of memoranda of understanding with the bulk of the money to be channeled by the Chinese private sector on a commercial basis - an inflow justified on the basis that no country at the time was willing to invest in Pakistan other than China.

Citing claims of the impact of the 2014 dharna on the economy may be dismissed out of hand by the PTI given the penchant of the then PML-N Finance Minister Ishaq Dar to overstate his achievements through blatant data manipulation - he downgraded the country's growth rate two years before he took over the finance portfolio, a latitude that could perhaps legitimately have been availed for one year past, with the objective of showing the highest growth rate since the fall of Musharraf. Be that as it may, the PML-N claimed a loss of between 500 to 800 million rupees due to the PTI sit-in while an over-zealous advisor to the then prime minister claimed 6 billion dollar loss to the economy (610 billion rupees) - a loss that included the extra resources required to maintain law and order, the appropriation of containers which impacted on transport of goods within the country and import/export consignments, the impact of the dharna on businesses/traders and last but not least the business of government was compromised as the dharna was on Constitution Avenue where all ministries are housed.

A number of studies have been carried out to assess the damage done to an economy as a result of political uncertainty. Alesian and Perotti pointed out in 1996 that political instability negatively impacts on investment (local and foreign) leading to low growth; and Ali, Hashmi and Hassan in 2013 found that non economic factors that include corruption, political conflict/instability and terrorism are key factors in poor economic performance. Thus research also supported the PML-N narrative on the PTI dharna that investment remained hostage to it.

The PTI challenged a number of CPEC projects especially with respect to the road projects that it claimed ignored the underdeveloped regions and that social sector, as opposed to infrastructure investment, should have been preferred (which is unlikely to attract direct foreign investment) when it was in opposition. However, since coming to power the PTI has been proactive in sanctioning CPEC projects, particularly road projects, though the pace is said to have slowed down due to lack of counterpart funds. While early last year the Khan administration was very optimistic about the inflow of foreign investment (particularly from Saudi Arabia and the UAE, pledged by the rulers of these two countries during their visit to Pakistan) yet today, like during the previous administration, there is almost exclusive reliance on CPEC as the major source of foreign investment. And, again like during previous administrations, there is periodic over-optimistic, albeit unrealistic projections of foreign investment inflows, by Prime Minister Imran Khan, and ironically on the same projects (Ravi etc.)

In 2014, terrorism was at its peak and threatened the country's economic fabric with the ongoing military operation yet to produce substantive results and the PML-N government constantly warned the PTI leadership and Tahirul Qadri - whose seminary students provided a major source of dharna participants with an identical charge leveled by the PTI against Maulana Fazlur Rehman's students today - of the danger of a possible terrorist attack on the dharna participants. Today cabinet members are referring to the threat posed by Covid-19 and the possibility of escalation in the numbers of infections. The PTI never heeded the warning in 2014 and the PDM has indicated it would not be deterred by the pandemic.Is the situation very different in 2020 with the launch of the PDM than during the 2014 dharna? There is no question that the economy today is much more fragile than in 2014 though the commonality is one year into the International Monetary Fund's (IMF) Extended Fund Facility programme. However while the IMF had extended a couple of tranches by the time of the dharna in 2014 today talks are stalled on the second mandatory quarterly review with the second tranche release pending.

The most important macroeconomic variant relevant to the general public with respect to 2014 and 2020 is food inflation. In August 2014, food inflation registered 5.6 percent and jumped to 7.2 percent in September 2014 - a jump that was largely offset by almost 10 percent budgeted raise in public sector salaries and a GDP growth rate of a little over 4 percent. In August 2020, food inflation was 12.89 percent and rose to 14.74 percent as per the most recent report issued by the Pakistan Bureau of Statistics with a growth rate of one percent projected by the IMF for this year. There is a real danger that any further raise in food inflation and a decline in the growth rate, indicators that are susceptible to protests, may generate civil unrest.

Today Islamabad is under container lockdown in the Blue Area, the seat of our government, because of non-opposition backed strikes by clerks, and health workers, whose salary was not raised this year. Disturbingly, Dr Hafeez Sheikh, the Prime Minister's Advisor on Finance repeatedly thanked senior military leadership for agreeing not to raise salaries this year, a sacrifice indeed in spite of the fact that military personnel have access to subsidized food and other products at CSDs, yet he did not thank the lower cadres of the civil workforce who are losing the battle of making ends meet due to runaway food inflation.

Unemployment began to rise due to the government's acceptance of extremely harsh monetary and fiscal policy conditions leading to choking off productivity - a contraction foreseen by the IMF and reflected by its downgrading the growth rate to 1.5 percent (pre-covid19) and raising the rate of inflation to 13 percent for the year past. Inflation and unemployment together is pushing more people under the poverty line - a push that simply cannot keep pace with the raise in budgeted allocations for Ehsaas progarmme which has subsumed the cash disbursements under the Benazir Income Support Programme.

Political uncertainty unleashed by the launch of the PDM protest may not topple the government but its effects on the economy and the general public would almost certainly be felt. Any narrative that lays the blame for the current state of affairs on the opposition is unlikely to be accepted by any but the diehard PTI supporters, though even some PTI lawmakers openly expressed their reservations at the government's performance during the parliamentary meeting held on 16 October.

To conclude, the Prime Minister would do well to acknowledge that while attacking the opposition for the state of economy and pledging accountability and clean government may be good slogans before an election, especially with no prior track record in government, yet two years down the line focusing on the same narrative is not a convincing argument.

(This is the first of a two-part series of articles on the challenge posed by political conflict today. Next week would detail the Prime Minister's preferred way forward.)

Copyright Business Recorder, 2020