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EDITORIAL: Prime Minister Shehbaz Sharif, in his maiden speech to parliament after his election, pledged to rebuild Pakistan. He correctly identified the economic malaise that besets the country today with a historically high budget deficit projected for the current year (with a significant contribution sourced to former Prime Minister Imran Khan’s 28 February relief package on petroleum and its products as well as a reduction in electricity tariffs to be effective till 30 June and the industrial package on 1 March envisaging exemptions for industries excepting a few as well as an amnesty scheme), heavier than ever reliance on borrowing to fund a runaway current expenditure (allowed to rise by 75 percent during the past three and a half years), inflation (food inflation consistently in double digits for the past three years), with six million becoming unemployed and 20 million pushed below the poverty line; and foreign exchange reserves have plummeted to cover only two months of imports.

Shehbaz’s stated objective: to make Pakistan a paradise for investments, to forge good relations with not only friendly countries (Saudi Arabia, the UAE, Turkey and China) but also to focus on major trading partners, including the European Union and the US and “opt for dialogue over deadlock, and rapprochement over disagreement” — clearly a dig at the former Prime Minister who made matters public that in the past were more appropriately dealt with through diplomatic channels.

The first order of business that the new government has to deal with on an emergent basis is to revitalize the talks with the International Monetary Fund (IMF) on the seventh review that were stalled on policy matters specifically relating to the 28th February and 1st March packages that were violative of the sixth review agreement. It is highly unlikely that the Fund would re-engage in a policy dialogue before these two packages are withdrawn.

And politically challenging as their withdrawal would be thereby providing ammunition to the ongoing Pakistan Tehreek-e-Insaf’s (PTI’s) countrywide protests yet there is no other way around it. Perhaps in acknowledgement of this basic fact, Shehbaz thought it appropriate to raise pensions by 10 percent, a raise that would add 48 billion rupees to the 480 billion rupees budgeted for the current year, and announced the raising of the minimum wage to 25,000 rupees, relevant largely for the private sector, which at this point in time would be applicable to the federal capital only unless endorsed by the provinces.

There is no doubt that the rise in pensions would cost the treasury a lot less than the two relief packages that were announced by Imran Khan and may be acceptable to the Fund with the proviso that pension reforms that have been long overdue may be launched for future retirees.

Checking inflation would require not only a massive decline in current expenditure, thereby reducing the budget deficit which in itself is an anti-inflationary policy, but also a rise in productivity and employment through re-energizing the China Pakistan Economic Corridor. Shehbaz announced wheat would be made available at cheap rates under the Ramazan package though he did not provide details but the consensus at this point is that he would have to utilise his considerable administrative experience to ensure that the district administrations begin to play their due role in ensuring that the price list is actually being implemented by the vendors.

Shehbaz also rightly pointed out in his speech that there is a need for unity and hard work “if we have to save the sinking boat,” and he referred to his offer of a ‘charter of the economy’ to the previous government — an offer which was roundly rejected. Unity would ensure the passage of the next National Finance Commission award, he added — last agreed 12 years ago in 2010. And while he placed the onus on the PTI administration yet in all fairness the PML-N government (2013-18) must also bear the blame for not making the next NFC award a priority. In these contexts, it is disheartening that the PTI has decided to resign from the lower house of parliament and launch street protests, as it could have played a constructive role in shaping the economic policies that would impact on its diehard constituents. Furthermore, former Prime Minister Imran Khan must surely understand that he lost the vote of no-confidence at a politically propitious time as the economy had reached an impasse with the Fund referring to the need for policies to achieve economic stabilisation, the mantra in 2019 at the start of the programme, rather than to focus on growth.

Significantly, prime minister Shehbaz Sharif also pledged that the parliamentary committee on national security would launch an inquiry — in camera — into the allegations of an international conspiracy to oust Prime Minister Imran Khan, which would include relevant members of the civilian and military leadership as well as the ambassador who wrote the ‘letter’; and wisely he refused to put the label of ‘traitor’ on anyone. He further stated that Pakistan was desirous of peaceful and good relations with India but there would be no peace without dialogue to resolve the Kashmir issue and called on Narendra Modi to understand that there is poverty, unemployment and disease in both countries which needed an overarching focus.

One subject that Shehbaz did not dwell on and which he needs to focus on is that of accountability — the legacy of the PTI administration’s three and a half years on which it failed to deliver. Witch hunts targeting opposition members, without adequate proof and/or a competent public prosecutor’s office to ensure a conviction, were seen time and again in all cases during the past three and a half years, with all the accused out on bail after several months of incarceration in jails. Shehbaz Sharif delivered a well-balanced and passionate maiden speech as the prime minister but that has been the case with many of his predecessors, however, it is action that speaks louder than words and one would have to wait for that.

Copyright Business Recorder, 2022


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