EDITORIAL: Prime Minister Imran Khan while speaking by a video link on Pakistan Tehrik-i-Insaaf’s 25th foundation day has claimed that due to the policies of his administration the economy is “booming” and all sectors, particularly agriculture, have benefited the most during his government’s ongoing tenure; and provided yet again an entire litany of accomplishments: rupee has appreciated, construction of dams, 10 billion tree tsunami projects; steps to make Pakistan a welfare state including health cards, construction of shelter homes and housing loans while further wealth creation will be through construction of two new cities on islands in Sindh, although the provincial government has expressed its opposition to the federal government’s plan, and a central business district in Lahore.
All previous administrations led by elected governments have claimed success in all the fields that the Prime Minister claimed as a success due to his government’s policies. For example, the Zardari-led government (2008-13) initiated the Benazir Income Support Programme (BISP) and each subsequent year showed a rise in not only the budgetary allocation for cash disbursements to the poor and vulnerable but also its expansion to include associated programmes, for example, the Waseela-i-Taleem and Sehat programmes. This trend continued during the PML-N government (2013-18) though a failed attempt had been made to drop the word or name ‘Benazir’ from the cards issued. This programme continues to this day and BISP (Ehsaas Kafaalat Programme) forms the lion’s share of the 204 billion rupees earmarked for the renamed Ehsaas programme. Prime Minister Khan has further expanded the scope of the programme, for example; he has set up Ehsaas Roshan Portal (based partly on donations), koi bhuka na soye, langar khanas, etc., which must be appreciated; however, the amount allocated for these programmes is limited due to growing cash constraints. It is, therefore, important to note that the Health Card (once extended to the entire country) would provide a comfort level to the people of this country that are not even enjoyed by the citizens of all rich nations, for example, the USA. However, the jury is still out whether this is financially viable as this was considered during previous administrations.
However, during his tenure Imran Khan commissioned more than 40 task forces as well as committees whose recommendations if implemented would considerably improve his capacity to divert more resources to the needs of the poor and vulnerable. Two such committees are the pension reform committee focused on rationalizing and reforming the pension system and the subsidies cell which envisages consolidation and targeting of subsidies. If he succeeds in implementing recommendations of these two bodies he would go down in history as the Prime Minister who made a difference.
Sadly, the economy is not booming though in recent months it has begun to show some improvement on the back of easing of monetary and fiscal policies dating from April 2020 – the month that the pandemic broke out in Pakistan. The raging third wave of Covid-19 at present generates a lot of uncertainty in spite of the Prime Minister’s reluctance to impose a ‘complete’ countrywide lockdown to contain the virus. And while he is correct in pointing out that agriculture was the best performing sector in terms of growth in 2019-20 – 2.7 percent (with Covid-19 reportedly not impacting as much in rural areas until recently) against negative 5.56 percent manufacturing, negative 0.05 percent commodity producing sectors and negative 0.59 percent services yet this is on the very low base of 0.6 percent in 2018-19 (with a healthy 4 percent growth in 2017-18 – the last year of the PML-N government). Within the farm sector there has been a trend pre-dating the Khan administration whereby sugarcane output was supported (which subsequently led to domestic supply issues and/or export subsidy to the millers) at the cost of cotton, which constitutes around 60 percent of all value-added exports. This policy requires a major revision.
The creation of two cities in Sindh, considered during previous administrations as well, and the Ravi project in Punjab (again considered by Shahbaz Sharif’s administration and abandoned due to being financially unfeasible) are not new though one would hope that the Prime Minister can overcome all prevailing issues to launch them.
The rupee has appreciated in recent weeks on the back of remittance inflows (which cannot entirely be credited to overseas Pakistanis having greater confidence in the present administration) and due to swap arrangements and debt equity – factors that time will tell if they are sustainable. In addition, the appreciation is not as dramatic as the depreciation effective 6 May 2019 after the staff-level agreement was signed with the International Monetary Fund (IMF) and it remains to be seen whether this would be sustainable as the Fund has already stated in its second to fifth review dated April 2021 that “going forward the authorities will continue to (i) use purchases in the foreign exchange interbank market to rebuild reserve buffers amid favourable market conditions, but not to influence exchange rate trends; and (ii) limit sales to only offset disorderly market conditions.” This has been pledged by State Bank of Pakistan (SBP) in the Memorandum on Economic and Financial policies. The prime minister must not simply intent to do things well but he must act according to his seemingly pious intentions.
Copyright Business Recorder, 2021