Former finance minister Hafeez Pasha on Saturday said the country's economy is fast approaching a serious crisis that can only be averted through hard steps under a financial emergency. In an interview to Aaj News' programme 'Paisa Bolta Hay' hosted by Anjum Ibrahim, he expressed his views on the fiscal budget 2018-19 presented by Finance Minister Miftah Ismail.
Pasha said that the government in its last year tried its level best to convince people that it has brought about improvement; but disagreed with the government's claim of achieving 5.8% growth. He said according to his research growth rate was not more than 4.9 percent. He said PML-N government had been under immense pressure hence it overstated growth rate in 6 to 7 sectors including large scale manufacturing and crops. However, he agreed to 4 percent figure presented by the government.
He said government also failed to reduce fiscal deficit and it would continue to grow. He said the government had set a Rs 1500 billion deficit limit but it touches Rs 2200 billion. He said debt repayments and defence spending gulp a major chunk of financial budget. He said these two heads take away Rs 2800 billion but only Rs 800 are allocated for Public Sector Development Programme that would badly affect implementation of many CPEC projects also. "Government eyes short-term commercial borrowing and is going to seek $4-5 billion. New loans are taken to repay old ones," he said, pointing out that Pakistan had got huge loans.
Pasha criticised the government over what he said gift package amounting Rs 350 billion to Rs 400 billion. He said concessions were made for affluent class, rich and corporate sector which is not appropriate because of widening current account deficit and depleting reserves. He said relief should have gone to common man through reduced prices of petroleum products and the items which they use the most.
"National Economic Council is supreme planning body and annual plan should have been approved by that forum," he said. Pasha further said that chief ministers of three provinces walked out of the NEC meeting within hours after consensus reached over the National Water Policy; he suggested that the federal government should have taken four provinces into confidence over all relevant issues at NEC.
Answering another question, the ex-finance minister agreed that Pakistan would have to approach the IMF for loans because no other forum would lend money. However, he argued, conditions would not improve despite IMF's loan because according to our quota only $6 billion were left that would be a meagre amount for the five-year tenure of the next government. He said net boost to economy was already reduced owing to debt repayments and other reasons. He said that IMF's economic conditionality was not the only reason but there have been security-related issues as well. Hence, he suggested, the government would have to declare financial emergency and take required steps immediately to surmount serious financial crisis.
Pasha urged the rich class to share the burden. To another query, he said, timing of the tax amnesty scheme was not prudent and the government should have waited till June because whitening black money at 2% to 5% tax could create a negative perception. He said caretaker government doesn't take major decisions. "Caretakers come to drive vehicle in first gear and the full-fledged government makes long-term decisions," he said, adding that the next government would have to adopt critical measures.