A visibly-relieved Prime Minister held a meeting with other parliamentary leaders on Wednesday after Tahirul Qadri's supporters finally departed from Constitution Avenue. Once again he did not get a vote of confidence with respect to his administration's performance during the last sixteen months. Support, it appeared, was limited to acknowledging that this was not the right time for elections prompting allegations that as they never did have the mandate to begin with because of large scale rigging they were fearful of losing their seats.
The government's litany in defence of its sixteen month performance has consistently been to maintain that economic reforms are proceeding as strategized and their benefits have begun to filter down to the general public. They cite a lower rate of inflation, a higher rate of growth, rupee dollar parity that has remained within a specified range, a decline in government debt due to the policy of retiring expensive domestic debt (procured at 12 percent) with cheaper foreign debt (procured at between 5 to 6 percent) and rising foreign exchange reserves as positive developments.
So why are Imran Khan jalsas attracting so much public attention? Some PML-N supporters maintain that the reason is the coverage by the media as well as the festive atmosphere due to not only the composition of the crowds (youth and families) but also the entertainment provided during the jalsas; and has little to do with PML-N performance or Khan's charisma.
Detractors, however, dismiss data released by the Pakistan Bureau of Statistics (PBS) and maintain, with a great degree of credibility, that though macroeconomic data manipulation by Pakistani governments has become the norm yet the acknowledgement that the common man would not rely on state generated data but on the purchasing power of each rupee he earns as a barometer of his quality of life appears to escape the notice of government after government. And Nawaz Sharif's government is sadly no different. Thus while Shaukat Aziz, Musharraf's hand-picked Prime Minister was, according to reports, pretty blasé about substituting a figure in place of what had been painstakingly calculated by the PBS to reflect better than actual economic performance, Hafeez Sheikh manipulated the weightage of components of consumer price index to show lower inflation. An example was the reduction in weightage of food (with a price rise of over 24 percent) by 6 percent. During Ishaq Dar's tenure as the Finance Minister data released lacks any synchronicity, compelling comparisons with Shaukat Aziz rather than Dr Hafeez Sheikh. Examples are: (i) the claim that the growth rate exceeded 4 percent for the first time in six years in 2013-14 required reducing the growth rate from two years ago - an exercise that is obviously flawed; (ii) consumption of cement is calculated at 4.2 percent while the growth rate of the construction sector is estimated at 11.3 percent; and (iii) manufacturing growth was calculated at 5.3 percent based on the first 9 months, however, it fell in March to 4.3 percent but that has not yet led to readjusting the growth rate downward. There is an obvious solution to the tendency to doctor data, which is not credible and leads to flawed polices: delink the PBS from the Ministry of Finance and grant it full autonomy, a refrain that has also been taken up by several standing committees of the national assembly but pointedly ignored by all finance ministers including Dar.
Domestic production continues to be held hostage to (i) energy shortages, which are mainly a consequence of poor governance, (ii) failing to appoint heads of state-owned entities on the basis of merit through the establishment of a transparent process as per a widely hailed Supreme Court verdict and instead maintaining that the PML-N executive is more capable of selecting the right people for the right job (a view that accounts for all appointments being successfully challenged in a court), and (iii) failure to resolve the decades long political stalemate in Balochistan that compromises the ability to begin exploring the copper mines of Reko Diq as well as to explore new gas wells.
Exports have been declining and while the PML-N stalwarts blamed the dharnas for this yet the decision to keep the rupee-dollar parity at a rate well below its real rate is cited as another major reason (apart from the factors that are impeding domestic output) for declining exports. A strong rupee makes Pakistani exports more expensive relative to our competitors and international buyers have begun moving away from Pakistani exporters towards our competitors. Recent data reveals that July-September exports fell by 10 percent to 6 billion dollars in comparison to the previous year while in rupee terms exports declined by 12.5 percent. This raises serious questions as to why the government continues to intervene to sustain a rupee dollar parity that is well below the real rate. The reason is two-fold: (i) the focus of the government is clearly on reducing the budgeted allocation on repayment on foreign debt (the interest and the repayment of debt as well as the 7.5 and 8.5 percent interest charged on five and ten year Eurobonds); and (ii) reducing the import bill. Thus Dar's focus is on payments made to our creditors and for imports rather than on exports. A balance with respect to outflows and inflows while settling on rupee-dollar parity would have been an infinitely more appropriate policy. The solution therefore is clear but each day's delay in implementation is losing our exporters their regular buyers and a buyer once lost is difficult to convince to return.
Remittance inflows have saved the country's economy from flawed economic policies of past governments as well as the incumbent by propping up our reserves. And while our finance ministers including those appointed by the PPP-led coalition government as well as the incumbent government and State Bank Governors none of whom have completed their tenures since democracy was restored have claimed credit for this rise, due mainly to plugging the loopholes provided through hundi/hawala and the low rate of return in the West due to ongoing recession, yet such heavy reliance on remittances as well as foreign/domestic borrowing to strengthen our balance of payments position needs a revisit.
With respect to foreign policy with key players including the US and India the Nawaz Sharif administration appears to have taken a back seat. Gone is the rhetoric of enhancing trade with India (PML-N supporters blame the Modi hard line for this though an increasing numbers are citing the government's political weakness in the aftermath of the dharnas/successful jalsas along the width and depth of Punjab as a reason), and token condemnation of the drone strikes reminiscent of the five-year PPP rule. This abdication of foreign policy is nothing new for civilian governments though Nawaz Sharif had entered office with a markedly different battle cry.
What is ironic is that Pakistan's two favourite sports, that used to bring the entire nation together as no politician ever has been able to, have also been subjected to politicking over the years. The subordination of our natural talent in cricket and hockey to politics has been a painful and lengthy process and it appears to be complete given sustained losses in international matches in recent years. The patron in chief of the Pakistan Cricket Board as well as the Pakistan Hockley Federation is inexplicably the Prime Minister. Very serious allegations of nepotism were hurled by Pakistan Tehrik-i-Insaaf against the appointment of Najam Sethi and they persist even though he abdicated as chairman but retained his seat on the board of governors with reports indicating that he remains the real power because of Nawaz Sharif's patronage. The appointment of the president of the hockey federation also smacks of political nepotism though the PPP and the PML-N have, unlike in their selection of Chairman PCB, appointed former hockey players: Qasim Zia, a PPP man was appointed during 2008-13 and Akhtar Rasool took over the chair when the PML-N formed the government.
To conclude, the PML-N insists that work has begun to resolve the issues that face the country, however, the evolving consensus is that work needs to begin to resolve the issues facing the country and the way forward is to set up processes instead of relying on the integrity or competence of anyone selected as a federal minister or hired/appointed through executive decree. The Prime Minister recently sent a letter to his cabinet seeking an evaluation of their ministries/departments and has promised that these reports would be made public. One can only hope that this is not an exercise in public relations and that he also develops a mechanism through which an independent analysis that evaluates the evaluators is made possible in his administration and which was lacking up till now.
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