EDITORIAL: The government of Pakistan’s comparative data revealed under the title “Know Your Economy” in the media is but a reiteration of the rebuttal issued by the finance minister of the “White Paper” issued by the Pakistan Tehreek-e-Insaf (PTI) dated 4 January, asserting that the post 9 April 2022 economic policies have raised the prospect of default, accompanied by higher inflation and unemployment.
A few observations on the comparative data (2021-22 with 2022-23) are necessary. There is a claim that the average GDP was 1.2 percent higher in 2014-18 than in 2019-22. This claim is wrong, to put it mildly, because during one year and half (March 2020 to end 2021) Pakistan’s economy, like the rest of the world, was facing the once in a century pandemic and not to take account of this smacks of a partisan approach that no one can legitimately support. Food inflation worldwide due to supply chain disruptions and constraints was also an outcome of the pandemic.
Second, data comparisons for Tax Revenues, increase in imports, increase in trade deficit, increase in unemployment rate and Pak rupee depreciation are between 2017-18 when Miftah Ismail was the de facto finance minister (Dar had left the country as he was facing a case of assets beyond known means of income) and 2021-22 with the Khan administration falling on 9 April and the Sharif-led administration took over on 11 April with three months (less ten days) before the end of the fiscal year or, in other words, one cannot lay the entire blame for last fiscal year on the policies of the previous government.
Third, the decline in the growth rate of agricultural credit and per capita annual income in 2019-22 as opposed to 2014-18 again ignores the pandemic’s disastrous effects on the global economy, including Pakistan’s – a fact that also accounts for a decline in tax revenues.
Fourth, the fiscal deficit remained unsustainable during the Khan administration in marked contrast to 2013-18 attributable to keeping the PKR over valued until Dar’s departure from the finance ministry, thereafter Miftah Ismail did reverse this book-keeping driven policy and allowed the PKR to depreciate, a move that Dar criticised publicly. Fifth, the PKR-dollar conversion rate reached 204.6 in 2021-22 against 121.5 in 2017-18 when Ismail was in-charge of the finance ministry and desperately trying to reverse the flawed policy associated with the Dar years of a significantly overvalued rupee. Sixth, the policy rate was raised to 13.75 percent in March 2022 as against 6.6 percent on June 2018; and the fact that it is 16 percent today is conveniently overlooked.
And finally, public debt and liabilities rose from 29879 billion rupees in June 2018 to 53544 billion rupees in March 2022. There is no doubt that as the rupee depreciates giving the figure in rupees rather than dollars provides for a wider gap.
However, the Khan administration upped the external debt and liabilities from 95 billion dollars to 135 billion dollars with 38 billion dollars repaid (interest and principal as and when due) and 13 to 14 billion dollars for budget support. There is no doubt that the figure for 2022-23 would be even higher.
To conclude, point-scoring through the release of selective data continues to remain a hallmark of our public discourse irrespective of who is putting out that data. We have yet to see any of the administrations, whether previous or present, acknowledge that we have been and continue still to live beyond our means as a nation and that this cannot continue any more.
The need, therefore, is to formulate and implement corrective policies rather than claiming success where there has been none and in public interest in particular is to take measure of ongoing flawed policies, announce their immediate reversal and the schedule of implementation of structural reforms to gain leverage with the Fund for the pending ninth review talks.
Copyright Business Recorder, 2023
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