After being kicked out by the PDM (Pakistan Democratic Movement) government, former Finance Minister Miftah Ismail’s article in Business Recorder showcases that the PDM government remains completely indifferent to the ground realities of the masses.
Congratulating himself and the PDM leadership, Miftah claims that he has helped Pakistan avert sovereign default. Then he claims that the ‘record-breaking’ performance of the last six months which includes the highest inflation ever recorded in our history, the highest increase in public debt ever recorded and the shocking increase in unemployment is not just ‘a favor to this nation’ but a selfless sacrifice made by the PDM government that they owed to ‘our homeland’.
Under the PTI government, the economy was growing at over 6% and record number of jobs were created for the youth. The political instability created by the VONC (vote of no-confidence) and the destructive policies of PDM government under Miftah have extracted huge costs from the economy and its citizens in the shape of record high inflation, free-falling currency and the economy nose-diving into a recession. All records have been broken in the first six months of the PDM regime, with inflation of 27.3% in August rising to the highest levels ever recorded in our history.
The government borrowing in the first 4 months of Rs 7.4 trillion is another new record. At the current pace the PDM government will increase Pakistan’s debt by a whopping Rs 22 trillion in their first year. To give context, that is more than the total amount of public debt accumulated in three and a half years under the PTI government.
Low investor confidence, record-high cost of doing business, and draconian tax measures and import restrictions are dragging the economy into a recession. The Large Scale Manufacturing sector posted a decline of -1.4% y/y in July 2022 and is down 28% from the peak levels posted under the PTI government in March 2022. The PDM regime has successfully pushed the economy into a recession with millions of workers facing risk of unemployment and poverty.
Post-July the outlook has deteriorated further as a result of the super floods. The loss of crops, livestock, and livelihoods of more than 30 million flood-affected citizens will have a significant impact on the growth outlook.
Despite the misery facing the people, the PDM government remains focused only on wasting scarce taxpayers’ money on running the largest cabinet in history with more than 75 ministers/SAPMs, unending pleasure trips abroad and giving relief of billions to their own leadership.
In 2018, the PTI government inherited an economy which was on the verge of default with $ 20 billion current account deficit (CAD) and less than $ 10 billion of SBP reserves. To give context, CAD in 2022 is estimated at $ 17.5 billion and SBP (State Bank of Pakistan) reserves were over $ 16 billion when the VOCN was moved in March 2022.
However, unlike the PDM government, we were able to turn around the economy to outperform the global and regional markets post-Covid pandemic. We achieved this through reforms aimed at addressing the core issues of our economy, namely the investment-saving gap, the revenue-expenditure gap and through measures to enhance productivity across the agriculture and manufacturing base.
The investment-saving gap as manifest through the CAD was brought down from $ 20 billion (7% of GDP) in 2018 to $ 1.8 billion in 2021. This was achieved through strong growth in exports of goods and services and record remittances from overseas Pakistanis.
The commodity super-cycle in 2022 has led to widening of the CAD, with international oil prices at the highest levels since 2011. Yet even despite record high oil prices, CAD in 2022 is estimated at $ 17.5 billion (4.5% of GDP), which is still below the 2018 levels. Exports of goods reached record levels of $ 32.5 billion, compared to $ 24.2 billion in 2018. Exports of IT sector doubled to over $ 2.5 billion, from less than $ 1 billion in 2018.
The revenue-expenditure gap was addressed through reforms to broaden the tax base and enhance compliance. Reforms included targeting the retail sector through the point of sale machines, the single-window operation for customs for reducing under invoicing and the track and trace system for the big industries including sugar, cement, tobacco and steel. As a result of these reforms, the FBR collected over Rs 6.1 trillion in FY22, a growth of over 28% despite keeping GST on petroleum products at 0%.
The PTI government economic policies led to a significant increase in productivity across the agriculture sector and the manufacturing activity, as was manifest in 6% growth achieved in FY22 and 5.7% growth in FY21. This can be seen with the record crop output and record growth of the manufacturing sector in the last two years. Large Scale Manufacturing (LSM) posted an 11.7% increase, with record exports of $ 32 billion.
The inclusive growth strategy adopted by the PTI government with focus on labour-intensive construction, export industry, SMEs, tourism, and agriculture has led to the creation of 5.5 million jobs in first three years, the highest by any government on record.
On average 1.84 million jobs per year were created under the PTI government, which is significantly higher than PPP (Pakistan People’s Party) (1.4 million) and PML-N (Pakistan Muslim League-Nawaz) (1.1 million). Data shows that we would have achieved the 10 million jobs that were promised by Imran Khan in the 2018 manifesto.
Inclusive growth entailed providing incentives to those middle income households, small farmers, youth, women and entrepreneurs that are marginalized in the current system of trickle-down growth. The Low-Cost Housing program (MPMG) and the Kamyab Pakistan Programme (KPP) success can be seen in the numbers.
According to the SBP, over Rs 450 billion has been disbursed by June 2022, from Rs 150 billion end of 2019, under the MPMG programme, benefiting more than 30,000 first time home buyers across Pakistan. Similarly, the Kamyab Pakistan Programme (KPP) of interest free loans helped to uplift incomes and livelihoods of millions of low and middle income households.
In line with Imran Khan’s vision of a ‘Riyasat-e-Madina’, extraordinary measures were taken to scale up Ehsaas spending for the poorest households. During Covid the government provided cash assistance to 15 million households (45% of total population), making it the largest social welfare transfer in Pakistan’s history.
The landmark universal healthcare programme Sehat Insaf card coverage was enhanced in 2021 and now covers all citizens of KPK, Punjab, Islamabad, GB, AJK and certain districts of Sindh and Balochistan. As a result, citizens benefit from free hospitalization and healthcare, providing savings of Rs 10 lakh to each family.
It was the success of Imran Khan’s policies and the fear of his growing popularity that the PDM leadership schemed to topple our government, with the help of their facilitators.
It is now obvious for all citizens that the only agenda of the PDM leadership is to protect their ill-gotten wealth, welfare of the people does not feature on their radar.
Copyright Business Recorder, 2022
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