EDITORIAL: How typical that former prime minister Nawaz Sharif and his senior aides told Lahore’s business community that economic strategies should be framed in consultation with them and “other key stakeholders”, yet he also told them to expect the same policies of the past that ran the economy into the ground should PML-N (Pakistan Muslim League-Nawaz) be re-elected in the February general election.
Visiting LCCI (Lahore Chamber of Commerce and Industry) along with former PM Shahbaz Sharif and former finance minister Ishaq Dar, and other senior PML-N leaders, the former three-time PM waxed eloquent about his and his party’s services to the country, especially the economy, which the business people present no doubt took with a grain of salt.
Yet it’s also strange, to say the least, that their hosts at the LCCI only meekly lamented the badly skewed dollar rate, unprecedented interest rate and inflation, and especially high cost of production.
Surely, Ishaq Dar, at least, would’ve understood what they meant when they said that continuous devaluation of the rupee against the dollar was responsible for factors like high prices, high input costs, high markup rate and high cost of utilities.
It was his unending obsession with artificially propping up the rupee that burned through meagre national reserves and triggered a historic collapse of confidence in the local currency, after all, and the last thing the business community would want is further uncertainty stemming from more interference in the money market after the election.
Nawaz Sharif also read out the old script that things were bad when PPP (Pakistan People’s Party) took over in 2008 and better by the time PML-N was done “turning the economy around” by 2013.
That conveniently overlooks the fact that while the 2013 situation was indeed better than 2008, it was only after a marked improvement by the end of PPP’s tenure in 2013, especially in export revenue, which then worsened during PML-N’s rule.
One would expect LCCI officials to know the minute breakdown, and how the former ruling party was fiddling with facts and statistics to make its case, yet they didn’t point this out for some reason.
It is the policy failure of the last decade or so that brought the country dangerously close to sovereign default. Indeed, if it weren’t for the IMF (International Monetary Fund) programme, default would be the number-one item on the government’s agenda right about now.
That’s why the interim finance minister minced few words when she said that the country would definitely need another IMF programme, most likely one more EFF (Extended Fund Facility), when the SBA (standby agreement) is completed.
She also cited the present environment, especially very high interest rates, as the reason for postponing the issuance of a $1.5 billion international bond.
But nobody is saying anything about raising export revenue, without which reserves will remain under pressure and none of the biggest problems will go away. The business community should have told the former PM and his team that the economy would not survive another round of his trademark policy prescription of fiddling in monetary policy, forcing up the rupee, and shrinking the little export revenue that comes to the country.
Since Nawaz Sharif seems to have the wind at his back, he must be made aware that all finance ministers he’s chosen in the past, not just Ishaq Dar, have done more harm than good to the country.
And if he does succeed in forming government a fourth time, he will need to adopt a radically different approach than the past. For, the economy does not have any more room for unsubstantiated experiments born out of professional ignorance of a few powerfully connected people.
Copyright Business Recorder, 2023
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