The PTI government started its tenure on a promising note, pledging that it would turn around the crippling economy that it had inherited from the PML-N government. The market sentiments, spurred by the hope of good times ahead, well reciprocated the enthusiasm of the PTI economic leadership with rupee dramatically regaining its lost position and stock exchange showing vibrancy, however modest.
But, these sentiments proved to be short-lived. After PTI government's nine months in power the rupee further lost its value, foreign reserves depleted, fiscal deficit persists, burden of loan is enhancing, exports and foreign investment are stagnant and loses arising out of circular debt and PSEs have escalated while the IMF bailout deal is still in a limbo.
So what went wrong?
To start with and rightly so, the government economic team earnestly attempted to adhere to PTI manifesto of accountability at all levels of governance, divert the black/grey economy under a tax regime to enhance tax base, take socio-economic-oriented economic measures in favour of the have-nots of the nation, revival of the loss-making PSEs by pumping in more money in their restructuring, replacing the IMF with funds from friendly countries and overseas Pakistani investment and remittances.
All of this did not work out as perceived.
The aims and objectives of the PTI government undoubtedly were in general public's interest. The then Finance Minister Asad Umar entrusted with the task of implementing the manifesto enjoyed the reputation of great integrity, intelligence and remarkable will and perseverance to deliver - which he well exhibited till his last day in office and left with grace and good wishes to his successor.
Unfortunately, the timings, the tools and the priorities of the government were not in line with the ground realities and this is where the government missed out. The state machinery inherited by the economic leadership to implement its revolutionary manifesto lacked competence and will to deliver. Also, the market was not ready to adopt such dramatic changes in so short a time period.
The economic leadership could not well fathom out the strength of the black economy 'fraternity'.
The taxmen, who were given free-hand to rope in tax evaders in real estate, industry and trading, worked more in their own interests than national interest and compelled the key market players in real estate, trade and industry to go under hibernation with money pulled out of the market and its trickle-down shocks felt by the smallest of small vendors and roadside shopkeepers.
The transactions in market came to a sudden halt and with that the government revenues and tax collection nosedived culminating an unprecedented tax gap and a euphoria of economic meltdown.
A smart business entrepreneur with the objective to turn-around his existing business or a newly acquired business first go for enhancing his revenue and cut down his expenses to improve his profitability to pay for improvement of his systems and processes, welfare of his employees and loan repayments, if any. The same holds true for the government. The incumbent government could not ensure revenue enhancement nor could it curtail mega losses emerging out of circular debt and PSEs to the tune of over Rs 3 trillion.
The government should have straightaway gone for an IMF bailout within the first month of its tenure with its ownership and its adverse consequences resting on the shoulders of the past government. With a nine-month delay, however, it placed the IMF loan ownership and its consequences on its own shoulders and having in the meantime exposed all its cards, thereby compromising its negotiation position with the IMF.
The vision or mission of the PTI government for accountability, tax base enhancing, socio-economic policy for the people welfare is the right way forward and has already been adopted by all nations which today are the frontline states excelling in economic management and their people's welfare. In Pakistan much has gone wrong in the past seven decades and most of the ills have become norms. Here the change has to be incremental and not exponential.
During the past nine months the incumbent government has planted good quality of seeds which should be allowed to germinate organically without adding fertiliser to force its exponential growth.
(The writer is the former President of Overseas Investors Chamber of Commerce and Industry)