PML-N issues 'white paper' on economy

Pakistan Muslim League (Nawaz) has released a white paper against the government's economic policies, saying that massive adjustments undertaken by the government under the International Monetary Fund (IMF) program led to suffocation of the economy and rise in unemployment and poverty.

Former Finance Minister Punjab Aisha Ghaus Pasha speaking at the event, organized by the former ruling party PML-N titled 'Clarion Call, Rescue the Economy' and subsequent launch of the white paper, said that the country's external debt would increase from US $106 billion to US $135 billion and the country's dependence on external debt would be greater after the ongoing program ends in 2022.

Pasha said that due to the IMF program, 2.5 million jobs will be lost and the number of people in poverty would increase from 70 million to 94 million. The situation may lead to chaos and unrest in the country, she warned. She described the program as 'ill-conceived' with massive adjustment in the first year.

She added that speed of adjustment and intensity of the program are more than required and choice of instruments and policy actions were not desirable

She added that the program was mismanaged as prolonged delay led to decline critical indicators, such as foreign direct investment, inflation and tax collection.

Pasha said that speed of adjustments was so intense that the government agreed to reduce 73 percent current account deficit in the first year. The government is required to reduce the current account deficit from 4.6 percent of the GDP to 1.3 percent of the GDP and 2 percent of the GDP would be done in one year (first year) from $13 billion to $6 billion.

"The government has also agreed to bring down primary deficit from 3.6 percent of GDP to 0.6 percent of the GDP in the first year, which is 67 percent adjustment in one year," she said, adding that 40 percent rupee depreciation was used as tool to suppress imports and by doing that the government increased overall debt and inflation in the country. Additionally, she said that the government's decision under the IMF program to increase electricity and gas prices as well as withdrawal of zero rating, delay in clearance of refunds and elimination of tax incentives contributed to decline in exports.

As a result, there has been hardly any increase in exports if 40 percent depreciation is taken into account, she argued. She said that high policy rate is causing huge cost to the economy. There was no cut in current expenditure, she added.

She said that the government could have saved one million jobs and falling people below the poverty line if it has kept the real effective exchange rate (REER) constant and has not increased the discount rate so high. She said that IMF program was badly conceived and implemented by the government's economic managers.

Ahsan Iqbal said the present government has added more to the country's debt in one year than the total debt added by the PML-N in five years. This, he added, is scary pace of increase in the debt by any government in the history of the country in one year.

He further said that Pakistan which was on higher growth trajectory during the PML-N government is now on lower growth trajectory and is lagging behind India and Bangladesh and attributed the decline to political uncertainty. He stated that economic development is directly linked with political stability and continuation of policies.

He said that the economy which was being included in five emerging economies of the world is the lowest economy in the region and the major challenge is how to cater for the need of 120 million youth and stated that Pakistan is being pushed to the verge of social and economic pains and the situation may lead towards instability. He said that his government had borrowed for generating 12,000MW electricity, constructing 2,000 kilometers motorways and laying foundation of industrial revolution during 2013-2018.

He claimed that the country is being run by "ineffective, incompetent, indecisive and inefficient" government that has decreased GDP growth, foreign direct investment (FDI), tax revenue and exports, besides historic high fiscal deficit. The large-scale manufacturing (LSM) and agriculture, including major crops, are facing declining trend because of increase in fertilizer cost and pesticides and PSDP is not being released, adding defense budget has also been reduced.

Losses of PSEs have increased from Rs 235 billion to Rs 335 billion and "deception of lies" made against the PML-N of being corrupt and increasing debt and current account deficit has begun to expose now. The present government is danger to the security of the country, he added.

Former minister of commerce Khurran Dastagir Khan said that his party inherited three constraints to the economic growth - 12 hours load shedding, terrorist attacks and target killings in the economic hub of the country and successfully overcame these challenges and laid the ground for economic development by making available LNG terminals, completion of Neelum-Jhelum hydel project, Lowari Tunnel, Kacchi Canal and infrastructure development. He claimed that base for manufacturing capacity was laid down during the five years of the PML-N government.

Former governor Sindh Muhammad Zubair said that during the PML-N government, growth was increasing while inflation was decreasing and this trend has been reversed during the PTI government with growth decreasing to 2.4 percent from 5.8 percent and inflation has increased to 12 percent from 3.9 percent.

Earlier, Ali Pervez said that PTI has taken $16 billion foreign loan in one year whereas PML-N had taken $10 billion in five years of its tenure, adding the export industry is facing serious challenges because of the government's policies.

Another office-bearer of PML-N, Bilal Azhar Kiyani said that during the negotiations with the IMF in Islamabad, the government removed secretary finance for raising objections on the program being front-loaded and arguing that it was not in the interest of the country whereas chairman FBR and governor SBP were also removed for designing a program according to requirements of the Fund.