ISLAMABAD: Pakistan Muslim League-Nawaz (PML-N) President Shehbaz Sharif, on Thursday, said that the State Bank of Pakistan (SBP) has not confirmed the economic statistics presented by the government and which indicates that forged figures were presented. Addressing the pre-budget seminar and review presented by the PML-N, Sharif said that the “fake” government knows the “art of manipulation” and the government’s statistics have already become a subject of debate.
Shehbaz said the mini-budget presented by the government in the past is also in front of everyone and inflation has broken the backs of the people in three years.
The government was pushing out wrong statistics and misinforming the public since the start of the PTI tenure.
This comes on top of the government's worst performance and major failures. The PML-N chief further stated that, "We will present a joint stance after holding consultation with all the parties in the Parliament.”
The PML-N president said that the unemployment in the country has increased immensely and the progress on the China-Pakistan Economic Corridor (CPEC) project has slowed down. He said the country’s growth rate has turned negative, adding that the three-year performance of the government is in front of everyone. “We would have appreciated, if the government had done a good job.” He further said that media ordinance would be resisted. The PML-N in its presentation, proposed that on behalf of the government they demand that the federal budget 2021-22 should not contain any increase in any taxes or tax rates in order to avoid further burdening our people, refrain from increasing utility rates, especially electricity tariffs, and ensure competitiveness of our products in the international markets.
The PML-N leaders stated that the government needs to take up the EFF Programme conditionalities with the International Monetary Fund (IMF) and obtain substantial relief.
Former finance ministers of PML-N Miftah Ismail and Ishaq Dar blamed the government for poor performance on every front, while saying that the people of Pakistan have experienced a major decline in their quality of life.
When the PML-N left in 2018, the size of Pakistani economy was $313 billion, Ismail said.
After three years, Imran Khan has only managed to reduce this to $296 billion or by 5.5 percent even as population has increased by 7.5 percent.
This is a direct reduction in the income and purchasing power of Pakistanis by 13 percent.
This is the first time in history that the country’s GDP in dollars is reduced even after three years, said Ismail, adding that in their five years, the PML-N had increased growth from 2.8 percent to 5.8 percent, reduced inflation from 11.8 percent to 3.9 percent and doubled tax receipts from Rs1,946 billion to almost Rs3,900 billion.
In three years, in spite of high inflation, the PTI’s tax collection has remained stagnant and has decreased as a percentage of GDP.
The PTI has tripled inflation, increased food inflation more than five times PML-N’s rate, and substantially reduced economic growth.
After three years, even if we believe the PTI’s controversial numbers, they have reduced real rupee GDP on a per capita basis, he added.
The current regime was toying with the economy and claimed it had increased the loans of the government and state institutions to Rs45,000 billion.
The PML-N leader said PM Imran Khan even takes food for "langar" as part of its feeding the poor initiative from Saylani, an NGO.
Finance Minister Shaukat Tarin also admitted that an increase in interest rate increases debt, Ismail said.
He claimed the government was able to increase exports by a mere one percent, after devaluing the currency.
"We were expecting a six percent increase in Pakistan's GDP as the government had taken loans worth Rs15,000 billion," the former finance minister said.
The government, despite procuring such massive loans, is still predicting a GDP growth of four percent, he said, adding that loans of nearly Rs25,000 billion had now moved up to Rs38,600 billion.
During the PML-N's tenure, the fiscal deficit stood at Rs1,500 billion, and now it is at Rs3,500 billion, Ismail said.
"The FBR's collection has also fallen to Rs3,897 billion.”
The former finance minister said if the FBR has crossed the Rs4,500 billion mark it is no great achievement of the PTI and "this was the target for 2019".
The fiscal deficits in the years under Imran Khan have been the highest ever in Pakistan’s history (9.1 percent and 8.1 percent) and this year we will again, unfortunately, incur a budget deficit of over eight percent of GDP.
In three years, PTI’s budget deficits will cross Rs10,000 billion.
That is more than the deficits incurred by Nawaz Sharif in three terms as prime minister.
The government's austerity claims are lies, its spending has moved up from 16 percent to 20 percent, the former finance minister said.
Ismail claimed that during the PML-N's tenure, exports stood at $24.76 billion, while they have just reached $25.51 billion during the PTI rule.
Dar said that at the start of 2013 Pakistan was termed to be an economical unstable country and was declared that the new government would default in next 6-7 months.
Pakistan would not be in a position to fulfill its commitment as the SBP reserves were only $6 billion and had to pay back $4.6 billion in the next few months to the IMF, and no financial institution were ready to give single dollar to Pakistan.
The GDP was on average 2.8 percent during the five years before 2013.
The country was facing up to 20 hours of load shedding, inflation was 12 percent, tax base was low, fiscal deficit 8.2 percent.
Extremism and terrorism was at its peak.
With this, PML-N started government and went a well negotiated IMF programme and for the first time the programme was completed.
We brought the inflation rate four percent but now the PTI government has brought food inflation to 19 percent, said Ishaq Dar, adding that on average the GDP growth is 1.8 percent during the last three years.
This is the real problem.
Pakistan’s GDP grew by 5.8 percent in the PML-N’s last year (2018), the highest in 16 years.
In addition, GDP growth consistently remained above four percent in each of the PML-N’s five years.
GDP growth has significantly declined during the PTI’s tenure with 2.1 percent growth in 2019 and -0.5 percent growth in 2020, the lowest since 1952.
The PTI is claiming 3.9 percent growth now in 2021 but this claim is being challenged by independent economists.
Even if the PTI’s claim is to be accepted, average GDP growth under PTI is 1.8 in three years, which is below the population growth rate.
When there is political stability in the country there would be economic stability; however, sponsored sit-ins and Dawn leaks and Panama was staged to bring a change in the country.
Speedy debt was incurred on the country during the PTI government.
He said that despite cut in the PSDP, the government expenditures increased manifolds.
This government has increased our national debt by over Rs13,000 billion and “debt plus liabilities” by over Rs15,000 billion.
This government has increased our debt burden more in its first three years than any government in its full term in history.
In less than three years, it has added 54 percent to the national debt that was added in 71 years.
The PTI is adding Rs4,747 billion debt per year and building nothing.
In contrast, the PML-N added Rs2,132 billion debt per year on average and built schools, hospitals, power plants, motorways, and CPEC.
The country has become more rapidly indebted under the PTI government, debt-to-GDP ratio has increased from 68 percent to almost 80 percent of the GDP in just three years.
The PML-N took the PTI-led government to task over the economic policies it has adopted in the last three years, saying Prime Minister Imran Khan has no knowledge of the basics of economics.
Former Finance Minister Ishaq Dar, in his online address stated that the inflation had touched 24 percent at one point of time and currently it was in double digits.
This level of food inflation was simply unsustainable, he added.
He said that the PML-N-led regime increased GDP size from $80 billion to $315 billion in its five-year rule from 2013 to 2018.
The PTI-led regime, he said, had achieved average GDP growth of 1.8 percent, while PML-N had achieved average growth rate of 4.7 percent which was much higher than population growth of 2.4 percent on per annum basis.
The per capita income had gone up $1,650 during its five-year rule.
He said that the public debt went up by Rs10,000 billion during its five-year rule under which they added 11,000 megawatts into the power sector, 2,300 kilometers motorways and highways, and many other development initiatives but the PTI added Rs13,000 billion into public debt without undertaking any development work.
Former prime minister Shahid Khaqan Abbasi claimed that during the incumbent government's tenure, as many as five million people have become unemployed.
The PTI-led government has pushed 20 million people into poverty and has heavily burdened people by increasing the price of electricity by more than 62 percent.
He said the PML-N had pulled 20 million people out of poverty when it was in power.
Financial losses due to line losses and electricity theft have gone up to 4.5 percent, he claimed, adding Sui Northern Gas Pipelines Limited and Sui Southern Gas Company Limited were bankrupt today.
Abbasi said the country’s biggest issue was circular debt.
Pakistan's economy has shrunk by $19 billion in the last three years.
He said that even with the impact of coronavirus on the economy retroactively applied to the PML-N government’s economic indicators, the common man’s income would have risen by 25 percent.
People have received the gift of inflation through a stolen election, he said, implying that the general elections of 2018 were rigged.
Abbasi asked why the circular debt has doubled when every minister claimed in the assembly that the circular debt has been controlled.
“The masses would suffer when incompetent governments would be formed with stolen elections,” he added.
Abbasi went on to say that in 2018, the price of per unit electricity was Rs11.72 that has now reached Rs19.
He said the government s electricity revenue is more than Rs300 billion from expenditure but per unit price of electricity had risen 62 percent in the past three years.
He said that the biggest problem of the country today is circular debt, which has to be paid one day or the other, adding that the PML-N government had left circular debt of Rs1,150 billion which has gone up to Rs2,150 billion today.
The PTI promised to end any addition to the power sector circular debt.
But in spite of raising power tariffs on average by over 60 percent, circular debt today is both the highest in history and rising also at the fastest pace in history.
This year it will exceed Rs2,800 billion, which is an increase of about 1,700 billion in three years or almost Rs50 billion per month.
This is now beyond dangerous and may cause instability and supply disruptions.
Moreover, the high and cruel inflation we are experiencing is in part due to this rapid rise in power tariffs. Remember the tariffs were raised to control circular debt but circular debt is out of control.
The reasons behind this are reduction in bill collection rate, from 93 percent at the end of the PML-N government to 89 percent now, after slipping as low as 82 percent last year, and increase in transmission and distribution losses from 18 percent at the end of the PML-N’s government to over 19 percent now.
In addition, this PTI government has repeatedly violated the merit order and run inefficient and more expensive plants.
It, for instance, ran diesel plants in November and December last year to make electricity when it should have been using gas, LNG or coal.
This deliberate increase of the cost of making power plus epic mismanagement has led to high tariffs and high circular debt.
What is worse, the PTI has now gifted us circular debt in the gas sector as well.
The PML-N leaders said that the wrong policies and mismanagement of the PTI government has increased unemployment and poverty in the country.
Former Sindh governor Muhammad Zubair said four finance people have held the finance ministry’s portfolio during this government’s tenure.
“Where are those 200 people, who claimed they could fix the economy?” he asked.
Slamming the government, he said PM Imran Khan had sacked PTI’s “poster boy” Asad Umar as the finance minister within a span of eight months.
Zubair said he had advised Umar that the problem in their government was the captain — Imran Khan.
When they were unable to find a suitable candidate for the post of finance minister, they reached out to Hafeez Shaikh, he said.
The revenue growth target was set at Rs5.6 trillion, but the government could only reach 3.9 trillion, Zubair said, adding the government was unaware of what had led to an additional expenditure of Rs800 billion.
Zubair said the PTI, before coming into power, had vowed to end corruption and unemployment in 90 days, however, it is still intact after three years — and on the rise.
In PTI's three years, two finance ministers were from PPP ... the same PPP whose economic policies Imran Khan would criticise, Zubair said.
Former interior minister Ahsan Iqbal said the PML-N had approved development projects for Chilas and, Mirpur, and Muzaffarabad in 2016, but even after five years, the PTI is unable to inaugurate them.
Imran Khan has not been able to start works on projects such as Railway ML1 and Keti Bandar, he said, adding that during PML-N's tenure, meetings of the China-Pakistan Economic Corridor's Joint Cooperation Committee (JCC) would occur every six months.
However, it has met only two times, since PTI came into power, he added.
According to the presentation, federal and provincial public development spending in relation to GDP has also almost halved to 2.5 percent of the GDP only, further contributing to job contraction.
In 2018, PMLN’s last year, our tax and non-tax revenues were enough to cover, after paying provinces their due share, debt servicing, and defence.
And we still had a little left over.
Thus, the funding for defence and debt servicing was fully secured.
But the situation now in three short years is that there has been negative growth in per capita income, negative-to-low GDP growth, high inflation and, in spite of high inflation, a reduction in tax collection as a percentage of GDP.
Therefore, this year the federal government, after paying provinces their share in the divisible pool and debt service charges, will have little or no money left to pay for anything, including defence.
Hence, almost all funds for national defence will be borrowed, putting our security under financial threat. PTI’s failure to grow our revenues thus, threatens our national security at a time when so many critical changes are happening in our neighbouring countries, and we need strong security on the eastern and western borders.
The share of defence expenditures as a percent of the GDP has been going down during the PTI’s rule, and our fiscal space to pay for a robust and modern defence has gotten very limited.
Despite the load of additional taxation announced every year, the PTI government has shown terrible tax collection performance.
The PML-N doubled FBR tax revenues from Rs1.9 trillion in 2013 to Rs3.8 trillion in 2018.
The PTI government failed to grow the FBR revenues in its first two years.
The FBR revenues in both 2019 and 2020 were Rs3.8 trillion, same as PML-N’s last year.
The PTI is also on track to miss tax target for 2021 by Rs400 billion.
This year the increase is again likely to be less than inflation and growth, meaning it will just be a nominal increase and there will be no increase in real terms.
The tax-to-GDP, which was 13 percent of the GDP, when the PML-N government left, with revenues doubling it in its tenure, has now fallen to 10.9 percent.
The taxation structure has also become more regressive as indicated by a higher share of indirect taxes.
They further demanded that tube well power rates needs to be brought to Rs5.35 per kwh as maintained by the PML-N, enhance development spending focusing on the CPEC, water sector and completion of existing schemes to rationalise the throw forward, facilitate starting construction of Karachi-Peshawar (ML-1) railway line under the CPEC as proposed under the PML-N, increase funding for higher education above inflation, exempt five export sectors from sales tax as was done by the PMLN, economise on current expenditure through improved management and reform of SOEs, greater economy in operating costs and better management of government debt, make the power sector reform plan public and open for public debate, bring special incentives for the SMEs, and agriculture sector and sustain, in fact, broaden incentives for export promotion for nascent exports, and enhance relief measures through the BISP/Ehsaas Program for the poor.
Copyright Business Recorder, 2021