Not the whole truth

The Finance Minister informed the National Assembly in a written response that the rupee depreciation during 2008-13 was a reflection of a weak overall balance of payment (BoP) position while the incumbent government took a number of steps that improved the situation though he added that the inherited difficult position prevailed during the initial months of 2013-14 which has since improved.
The devil, as they say, is in the detail and the detail does not support the Finance Minister's claim on three counts. First, the data he presented in his reply shows that the rupee-dollar parity reflecting flawed economic decisions were almost entirely premised on electoral considerations in election years 2008-09 and 2012-13. Thus the rupee depreciated 16 percent in 2008-09 and 9.1 percent in 2012-13. However, the situation improved in 2009-10 when the PPP-led coalition government went on a 7.2 billion dollar Stand-By Arrangement (SBA) with the International Monetary Fund (IMF) and registered a negative 4.7 percent in 2009-10 and a negative 0.5 percent in 2010-11. In comparison, during the first year of the incumbent government, the rupee declined by a negative 5.1 percent which is higher than what was registered in 2009-10.
Second, at the time the PPP completed its tenure the rupee-dollar parity was less than 99 which was more or less maintained by the caretakers. However, the rupee began to lose its value hitting as low as 111 rupees to a dollar in the second half of 2013 - a decline that was arrested through an open market intervention by the State Bank, a policy contrary to the commitment made by the government with the IMF under the September 2013 Extended Fund Facility. However, the impact of the intervention was short lived and the rupee began to decline vis-a-vis the dollar again by January 2014 with the parity reaching over 105. Thence came the Saudi 1.5 billion dollar "gift" and the rupee stabilised as markets began to view this "gift" as an indication that the Saudis would support the economy as and when required.
And third as explained by Dar in the written response the government began to borrow heavily from the international market thereby shoring up the country's international reserves: (i) a massive spike in multilateral and bilateral support in the form of loans at Libor plus rates (compared to 2012-13) which was the natural outcome of the government's decision to go on an IMF programme from September 2013. It maybe recalled that the 2008 SBA was suspended in the first quarter of 2010 which had also dried up budgetary support from other multilateral and bilateral sources; (ii) receipt of 2 billion dollars from Eurobonds at 7.5 percent for five-year bonds and 8.5 percent for 10-year bonds - rates which are well above the prevailing rates even for countries that have a rating lower than ours for example Greece; and (iii) a successful auction for 3G licence which must be appreciated as this auction had been in the works for three years during the PPP tenure and it is unfortunate that supporting non-transparency in the award had led to delays.
There is no doubt that some decisions taken by the government must be appreciated and they range from the Karachi operation to the Zarb-i-Azb, the ongoing military operation in North Waziristan, to an obvious drive to enhance electricity generation to meet the energy deficit; it is also noteworthy that not a single mega corruption scandal has surfaced after one year of the incumbent government. Be that as it may, it is better to be humble about one's achievements rather than effusive in self congratulations.
Dar also maintained that in the past there was a negative market sentiment which has been reversed since the PML-N came to power. He would do well to look at data which reveals that the large-scale manufacturing (LSM) sector has been declining and heavy indebtedness for which he is squarely responsible would debilitate the government's capacity to implement infrastructure projects from its own resources - a factor that would simply enhance indebtedness. Some in-house out-of-the-box solutions are in order: slashing current expenditure or keeping it constant from one year to the next, prioritising development expenditure towards energy rather than towards road construction, granting autonomy to the State Bank in letter and spirit to enable it to take decisions that would control inflation independent of his budgetary needs, and last, but not least, to start the process of making appointments in state-owned entities as per the Supreme Court directives instead of issuing notifications aimed at circumventing the verdict.