Pakistan at a crossroads — I

The continuous failures and inability of the incumbent coalition government of Pakistan Tehreek-i-Insaf (PTI) to handle governance-related challenges have provided the opposition parties an opportunity to make a last ditch effort to oust the Prime Minister by submitting a joint motion of no-confidence under Article 95 of the Constitution of Islamic Republic of Pakistan [“the Constitution”].

The motion is signed by around 100 lawmakers of the opposition parties. After the elections of 2018, the PTI emerged victorious and Imran Khan assumed office as 22nd Prime Minister of Pakistan. At that time, many questions were raised on the fairness of elections, certain players acting behind the scene came under discussion and some named in media as khalayee makhlooq [alien forces] playing a pivotal role in helping PTI capture power. Political loyalties of many electables changed and some were even sent to jail or disqualified for life.

Under the former Chief Justice of Pakistan, Mian Saqib Nisar, the Judiciary was criticized by legal experts due to its shoddy interpretation to favour Imran Khan in a petition filed by PML-N’s Hanif Abbasi for non-disclosure of assets and an offshore company.

The Supreme Court accepted Imran Khan’s money trail without verification of the dubious letter presented by Rashid Ali Khan which contradicted income tax declarations. The honorable bench also entertained his stance on legal fees, availing income tax amnesty, income earned through playing county cricket, and Niazi Services despite backtracking from contradictory initial declarations on various occasions.

Apart from all of this, after assuming powers Imran Khan announced his first 100-day agenda which was more on nation-building rather than cutting ribbons of new development projects. He committed to transforming the governance system, revitalizing economy, and ensuring national security of the country. His other commitments included measures like conversion of Prime Minster’s and Governor’s Houses into universities and community public places, bringing back laundered money to Pakistan, reforming the Federal Board of Revenue, creating ten million jobs, strengthening the labour market through building five million houses, fixing energy challenges, and transforming China Pakistan Economic Corridor (CPEC) into a game-changer.

The situation on ground has been entirely different, e.g., on the economic front, rather than focusing on its agenda of economic growth and revamping the taxation framework, the government found an easy solution of collecting revenue through short-term approach of levying harsh indirect taxes.

Immediately after assuming power, the then finance minister presented the first mini-budget of the PTI government imposing new taxes of over Rs. 700 billion. Tax relief already available to the salaried class was revoked and tax rates enhanced from 15% to 20% on people falling in the highest income slabs. Customs duty was raised on more than 5,000 items whereas regulatory duty was raised on around 900 import items. The government substantially slashed development budget. Instead of promoting much-needed growth, all these measures adversely affected Pakistan’s GDP that dropped from 6.1% in fiscal year 2017-18 to 3.12% in 2018-19 and further worsened to -1% in 2019-20.

The indecisiveness of the government to go to the International Monetary Fund (IMF) forced Pakistan to obtain hot money at exuberantly high rates. This negligence badly impacted the economy already left in very bad shape by the two previous regimes. The debt balloon has been continuously inflating and its volume has ultimately reached the size of GDP.

The recent data issued by the State Bank of Pakistan show that the total debt and liabilities have surpassed Rs51.724 trillion — it was Rs29,879 trillion in 2018. External debt has increased to US$ 130.6 billion. The Pak rupee is on a constant down-slide and is touching a new low every day. The current interbank rate is Rs179 — showing the rupee has lost more than 50% of its worth since this PTI government assumed power. This has massively increased costs of input of businesses adding fuel to the fire of inflation.

Since PTI assumed power the pace of inflation has gained momentum, getting beyond the government’s control. According to the recent release of Pakistan Bureau of Statistics (PBS), the Consumer Price Index (CPI) has reached an alarming level of 13% which is higher than the previous tenure of Pakistan Muslim League Nawaz (PMLN).

Under the PML-N regime the average rate of inflation from 2013-to 2018 was around 5%. Moreover, the recent official figures show that the current account deficit has widened sharply this year due to phenomenal rise in imports. The data relating to imports released by PBS reveal that imports rose to US$52.50 billion during July-February 2022, as compared to $33.85 billion during the same period of last year. The balance of trade deficit is of US$31.95 billion.

The circular debt is growing constantly and has doubled since this government took charge. Higher transmission & dispatch losses of electricity distribution companies (DISCOs), lower recovery of billed amount, and non-payment of subsidies are among the major causes of circular debt accumulation. The circular debt as of 30-06-2021 stood at around Rs. 2.3 trillion! However, the PTI government despite tall claims in their manifesto failed to overcome this issue.

The main election promise of the PTI government was anti-corruption drive. However, like many other promises and claims, this also proved to be a misguided projectile landing nowhere near its objectives. The key ministers of Imran Khan’s cabinet were named in corruption scandals. The Election Commission’s scrutiny committee alleged that even the PTI’s head was engaged in fund embezzlement belonging to the party.

(To be continued on Sunday)

(Huzaima Bukhari & Dr. Ikramul Haq, lawyers and partners of Huzaima, Ikram & Ijaz, are Adjunct Faculty at Lahore University of Management Sciences (LUMS), members Advisory Board and Visiting Senior Fellows of Pakistan Institute of Development Economics (PIDE). Abdul Rauf Shakoori is a corporate lawyer based in the USA and an expert in ‘White Collar Crimes and Sanctions Compliance’. They have recently coauthored a book, Pakistan Tackling FATF: Challenges and Solutions)

Copyright Business Recorder, 2022