There were vows to ‘throw $200 billion at donors’ faces’, and to shoot oneself rather than taking recourse to IMF! Every small bit of news, from a meager Current Account (CA) surplus to a one-day rise in stock market, etc., was trumpeted as proof that the economy has now turned the corner.
By now, though, all that celebration has receded into muffled whimpers of ‘still learning’ to manage things, of Pakistan not turning around because there’s no ‘button’ to do that, and of countries taking long time for ‘transformation,’ The over-the-top celebrations on trivial CA surpluses, for example, have now given way to perspiring eyebrows as the CA deficit hit a record $6 billion in the month of August and public debt hit the Rs40 trillion mark! In between the irrationally exuberant vows promising all that is in the heavens, to the present timid acknowledgement that mere pomposity does not equate to material well-being, Pakistan (on aggregate) has been left with yet another tale of failed experiment in economic management, this time under the PTI.
So how did it all go wrong? Simply put, they fell hostage to their irrational exuberance, which created a noxious bubble full of false expectations that were never in consonance with ground realities.
To be fair, the warnings were there even before 2018. Between 2013 and 2018, there were enough instances in KP to ascertain that the Tabdeeli brigade’s economic management acumen is seriously wanting: for example, there was the much publicized and hyped KP Ehtesab Commission, found under the still widely-held (but false) belief that corruption is the biggest impediment to economic growth in Pakistan. That experiment, not surprisingly, fizzled out but only after spending billions in taxpayer money. There were other, similar experiments in futility, like stuffing thousands of children in government schools and portraying it as an unmatched success. Majority (if not all) of those enrolled under that forced venture have left. If it had been any of the opposition parties, they would have been hounded under the banner of ‘accountability’ for these ‘wasteful’ expenditures. But since accountability at present is a one-sided game, nobody is asking any questions.
The astronomical claims kept surfacing (and biting the dust), whether it was the $20 billion Saudi ‘investment’ that was to fall in our lap, or the ‘gigantic discovery’ of oil and gas reserves off Karachi’s coast that were to free us from our foreign energy dependence.
Undeterred by such lapses, the tales of phantasmagorical economic turnaround kept being foisted upon the unsuspecting audience. However, the first signs of the unraveling came early. Instead of the PM committing suicide rather than going to the IMF, ultimately our economic managers had to cower at IMFs feet (with PMs consent) to request a bailout package. Aside from the IMFs ‘bailout package’, a dash to Beijing, Riyadh and Dubai turned up a few billion dollars as ‘emergency’ loans, and promises to provide oil on deferred payments. And within the first 10 months, the star of the government’s economic team had to make an unceremonious exit.
One would have thought that better sense would prevail and a humble pie eaten after these initial events, and especially after anointing a former finance minister of a government whom Mr Khan had accused of serious corrupt practices. But it was not to be. The astronomical claims kept surfacing (and biting the dust), whether it was the $20 billion Saudi ‘investment’ that was to fall in our lap, or the ‘gigantic discovery’ of oil and gas reserves off Karachi’s coast that were to free us from our foreign energy dependence. But of course, none of that ever materialized.
To further our discourse, one can point to several examples of policies that are not in consonance with ground realities of our country. The ‘Murghee Paal’ (chicken rearing) scheme serves as a good reflection of economic management gone awry. Launched amidst much fanfare, it was an awful sight to watch PM trying hard to convince the audience of this scheme’s perceived efficacy in ameliorating poverty. Several years down the line and billions of rupees in taxpayer expense after, we rarely hear about the scheme or its impact upon poverty. In fact, government’s own statistics reveal that millions more have been driven into poverty!
Inspired by Bill Gates’ idea of chicken rearing as a cure to malnutrition and poverty in Africa, it was destined to fail from the very start because if desi chicken rearing were such a money churner, would people (especially the poor) have given up on it? Simply put, over time, people found that there are better earning options than rearing chickens and selling eggs.
Fact of the matter is that poverty can only be ameliorated through economic growth that is inclusive and sustained, creating earning opportunities plus sustained growth in income. But what do we witness in three years of PTI rule? We witness actions and policies that are exact opposite to these goals; inflation, driven mainly by numerous hikes in prices of necessities like oil, gas and electricity, has been on the higher side, severely depleting the purchasing power of poorer and middle classes. Similarly, the spate of demolitions carried across the country has destroyed the livelihoods of mainly the poor. In a recently held PIDE webinar (‘Urban Pakistan And The Street Vendor Economy’), the renowned architect Arif Hassan informed the audience that 3,300 shops (all owned by poor businessmen, 82 of them being women) were demolished by the government in Imperial Market area alone, leading to a loss of at least Rs46 billion per annum. No amount of safety nets, temporary financial assistance or chicken rearing schemes can ameliorate this loss of livelihoods.
Similarly, excessive emphasis on road building was once derided by the PM as a waste (rightly so). But the largest component of development expenses under PTI, incidentally, happens to be on roads. And figure fudging still resonates well within governance halls. The uncalled-for celebrations on achieving ‘record reserves’ did not, for example, inform people that approximately $16 billion (more than half) of these reserves constitute debt money.
No amount of safety nets, temporary financial assistance or chicken rearing schemes can ameliorate this loss of livelihoods
The above is just a small reflection of how policies divorced from ground realities end up doing nothing. One would have thought that this government and its economic managers would have learned some valuable lessons courtesy of their failures at the provincial and the federal level. Unfortunately, it is not to be. The Economic Advisory Council (EAC)’s suggestions confirm this. Take, for example, the rather childish suggestion to put a moratorium upon contracting foreign debt for a couple of years. Any person with even a slight understanding of our economic predicament would tell you that Pakistan would find it difficult to survive a few months without foreign debt, which is one reason why our big guns have to dash to Beijing, Riyadh and Washington to arrange emergency foreign assistance.
This, in sum, tells us that the game is still about playing to the galleries and cheap politics rather than any prudent decision making to ameliorate Pakistan’s long-standing economic issues. Meanwhile, gentlemen, hold onto your seats as more entertainment is to come.