LAHORE: Former federal finance minister Shaukat Tarin on Tuesday predicted that the country’s economic growth will be negative by the end of current fiscal year and dismissed the incumbent government’s claim to economic growth between 1 percent and 1.5 percent.
He expressed these views while addressing a party’s seminar held here to unveil the PTI’s ‘whitepaper on the state of Pakistan’s economy’. He said industries were shutting down while large-scale manufacturing, agriculture, exports and remittances were all in the negative zone.
“Textile sector, which constitutes 64 percent of the country’s export, was seeing a decline in its export of around US $2.2 billion per month and over 1.5 million textile workers have been laid off. In this bleak situation if someone believes that the economy will register a growth, he lives in a fool’s paradise,” he said.
Talking about the PML-N performance between 2013 and 2018, he said the PTI government inherited a US $19.2 billion current account deficit from the previous PML-N government while the foreign reserves stood at US $9.4 billion. “Moreover, we were also handed over an overvalued rupee by 23 percent, which was against the wisdom of keeping it undervalued to encourage exports.
The PML-N was trying to artificially control the rupee value and this led to a decrease in our exports. In 2013, our exports stood at US $24.8 billion, which declined to US $22 billion in 2016/17. Hence, a strong rupee became a cause for the decline in our exports,” he added.
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“Currently, the dollar has three different rates in the country while a major bulk of remittance payment has transferred to a non-banking system (hundi and hawala). The country’s foreign exchange reserves have dropped to US $5.7 billion from US $16.4 billion in nine months after the PTI government was removed. Moreover, US $600 million worth of payments was due in a week or so and if the government releases these payments then the country would not have any dollars,” he said.
According to him, no local or foreign investor was ready to invest in the country due to this deteriorating economic situation. The government was not in a position to borrow from international lenders due to the high credit risk rating. It was not even in a position to float the Sukuk Bonds to generate some fiscal space owing to its flawed policies and political instability in the country.
The ex-finance minister pointed out that the prices of most essential commodities have doubled or tripled but the incumbent government was focused on other issues. “During the past nine months, only two meetings were held to review commodity prices, which reflect the government’s priority. During this period, the price of onion has increased from Rs 44 to Rs 230 per kg. Similarly, the prices of other essential commodities, like tomato, potato, edible oil and petrol, have witnessed a record increase.
Speaking about the revenue collection, he averred that the government could barely manage to increase the collection by 15.5 percent whereas inflation increased by 27 percent, which means negative tax growth of over -9 percent; “in contrast, the PTI government managed to raise taxes by 36.5 percent during its term”.
“The economic managers of the incumbent government claim that they have reduced the current account deficit, but they do not say that the number was lowered after stopping the Letter of Credit (LC) payments worth US $5 billion and service invoices. If we include these numbers then the current account deficit was higher than what it was in our tenure,” he added.
Speaking about the way forward, he said, “We have to take tough decisions; either we accept tough conditions of the International Monetary Fund (IMF) or we would have to face poverty and unemployment. However, if the PTI returns to power after free and fair elections, it will turn around the economy through its past performance and good credibility while PTI Chairman Imran Khan would appeal to overseas Pakistanis to invest in the country. The party was making short, medium and long-term plans to revamp different sectors of the economy.”
“Though I cannot unveil the whole economic plan, I advise the government to negotiate with the World Bank, IMF and other agencies for debt restructuring and sell around 25 percent of the equity of state-owned enterprises,” he added.
Meanwhile, PTI Central Punjab General Secretary Hammad Azhar gave an overview of the ongoing energy crisis and underlined the performance of the PTI government in the energy sector.
The former federal energy minister said that right now Pakistan was going through an energy crisis and its roots go back to the decision taken by the previous government (of PML-N) between 2013 and 2018. He pointed out that in 2018, the PTI inherited Rs 189billion circular debt and brought it down to Rs 99 billion, but it was increasing again.
He also showed concern over the swelling of capacity payment losses to power generation companies; “in 2013, it stood at Rs 183 billion and after nine years it has swelled to Rs 1,100 billion”. He feared that in a few years, this figure would cross Rs 2,500 billion. “Imprudent decisions and nepotism gave us expensive power generation plants,” he added.
He averred that in comparison, there was no load-shedding in our tenure and the tariff rates were low.
Khyber Pakhtunkhwa Finance Minister Taimur Khan Jhagra, speaking on the occasion through a video link, said that in just nine months, the coalition government had withheld around Rs 232 billion from the province alone, adding that it was not fulfilling its promises regarding the merger of FATA and hence the KP was dealing security threats in former FATA on its own.
While addressing the seminar, former federal finance minister Dr Salman Shah observed that following the IMF conditionality was the way left to bring stability to the economy. He also advocated for a caretaker government to take over the country immediately, take all the tough decisions in 90 days, and then hold the general elections.
Dr Rashid Amjad, an economist, warned that the economy will collapse well before the country defaults, as the investors would not wait for such a situation and would pull out their money from the country well before time. He also pointed out that the government could not avoid default by supporting the economy with foreign loans. PTI senior leaders Fawad Chaudhary, Asad Umar, Jamshed Cheema and Musarrat Jamshed Cheema were also present.
Copyright Business Recorder, 2023
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