His first address to nation as PM is critically evaluated on the lack of substance on the constitutional scope of federal government. PM Khan seemed all over the subjects which are devolved to the provinces. Some say he is unaware. Some say he is a dreamer and romanticizing his ideas of a green and clean Pakistan which is far from the ugly ground realities of the land of pure.
But he touched the heart of common man; he resonated to the day to day issues of middle class urban household and shared the grief of the poorest of the poor. In short, he simplified the issues which are faced by the people of Pakistan and has shown strong will to resolve it.
If his theme of plans is to put in economic framework, the idea is to take the economy out of debt fueled growth trap. The twin deficit problem is core to the reoccurring balance of payment crisis. Whenever the fiscal deficit grows, the current account deficit soars invariably. This results in depletion of reserves and the IMF brings you home along with blessings of Uncle Sam.
This is happening again; and nothing can be done today but to take loans from left right and center. The change what Imran implied from his speech is to not repeat the episode in 2023 of what happened in 2013, 2008 and 1998.
In order to change the trend, unconventional thinking and unorthodox steps are required. The fiscal deficit cannot be curtailed on sustainable terms as long as the country runs primary deficit; and Imran has shown this concern by saying that to pay interest we have to take loan.
The symbolic reduction in PM house expenditure can cascade across the government machinery and this has a potential to bridge the trust deficit of tax payer on government which can do wonders to tax collection. Not to mention, there are no gains without reforming FBR which is a challenge.
Then there are gains from bringing efficiencies in PSEs where PTI seems to have a doable plan. The development expenditure has to be cut and prioritized. His plan is to devolve the expenditure to the third tier with no funds for MNAs and MPAs. This can ensure development in remotest districts where the economic returns on development are deemed to be the highest. Having said that, austerity requires low development spending unless the revenues grow.
In a nutshell, if he sticks to his plan, the primary deficit can turn into surplus within a couple of years and that inherently lowers the current account deficit. Till that happens, monetary tightening and currency adjustments are required to manage external imbalances.
He did not talk about CPEC or China; he did not show inclination towards getting help from US or KSA. On foreign policy, there is no sustainable gain without financial empowerment; else every lender can and will take you for a ride. He asked for Pakistan Diaspora for help as every other dollar coming to the country has strings attached; he needs is to win heart and trust of millions of Pakistani living and working abroad.
However, he can get the help once or twice in five years. These are stop gap solutions to minimize the need of external loan. For sustainable basis, exports must pickup. This cannot happen by extending cash hand outs to traditional textile exporters.
His approach is to look inwards to bring competitiveness and productivity at par to the world by addressing the deep routed structural issues with institutional independence at the top. Reforming FBR, cutting the conduits of systematic corruption and bringing efficiencies in the energy sector can substantially reduce cost of doing business.
These are real tough task; and odds are not in favour. He has to do repeat the performance of 1992 World Cup – to do the unthinkable!
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