The economy under the PTI

When it comes to the PTI’s economic performance, discussions tend to be one sided . In a recent article in these pages, Mohammed Zubair , ignored his own party’s faults during…When it comes to the PTI’s economic performance, discussions tend to be one sided (either for or against). In a recent article in these pages, Mohammed Zubair (‘The two-year scorecard’, July 19), ignored his own party’s faults during 2013-2018.For example, while decrying the growth in public debt under the PTI, he did not mention the fact that a major portion of accrued debt was used to repay debt accrued under the PPP and PML-N. Further, the fall in GDP is strongly correlated with a fall in trade deficit, which had risen to a historical high of more than $50 billion, partly due to Ishaq Dar’s insistence to keep the rupee to dollar parity at Rs100. As the PTI rightly took steps to reduce the deficit, a fall in GDP was expected, made worse by Covid-19.For me, the PTI government’s major weakness was its unrealistic proclamations before coming to power, assuring the people that it had a set program of reforms and a capable team ready to set the economic direction right. Two years down the line, it’s clear that they neither had a team nor a program. In promising outlandish and unrealistic scenarios, the PTI dug itself a hole from which it will be difficult to come out till it remains in power.Most of what the PTI’s economic team has done till now is what all economic dispensations have been doing before them: day-to-day firefighting.Economic management in these two years has been influenced by ‘imported’ ideas. Two failed ventures – the chicken breeding program for poverty alleviation and ‘Sarmaya-e-Pakistan’ – amply reflect this fact. The former was inspired by Bill Gates’ advocacy, while the latter was inspired by the Malaysian success in turning around its loss-making public entities. In the case of chicken breeding, the ground realities suggest that breeding chicken at home has long been given up, even in rural areas. If it were such a potent weapon in poverty alleviation, nobody (especially in rural areas) would have given up on it. Yet, against all the evidence, the program was launched with much fanfare. Today, it’s rare to even hear about it even from the government’s overzealous PR spokespersons.Similarly, the sarmaya concept was doomed from the very start because Pakistan and its public-sector entities are quite different from Malaysia. Expecting that the entrenched interests would give up so easily turning them around was nothing but naivety. In this exercise, no lesson was learned from previous such exercises and why they remained futile? The PSEs still bleed fiscally, more than ever. By now, the ‘sarmaya’ company is only a name.Another case of mindlessly diving into the unknown without taking into consideration ground realities is the case of special economic zones (SEZs). In the zest to create newer SEZs, no consideration whatsoever was given to the issues plaguing the already established one’s (like under-utilization of resources and service provision issues). If the already established SEZs are finding it difficult to operate, what logic is there to establish new ones?The touchy issue of inflation remained unmanaged, and has been a continuous blot on the PTI’s economic team’s performance. Here, the fault lies in poor understanding of the value chains that underpin working of the different sector sectors of the economy (like food production and distribution and oil supply). Raising interest rates only exacerbated the situation because it was never a demand side phenomenon but supply side issues that made it worse.And of course, like its predecessors, Khan’s government has never given serious thought to two fundamental but largely ignored causes of Pakistan’s economic malaise: its continuously rising population and low overall productivity in almost every sector of the economy. The former applies a seriously crushing pressure on already dilapidated state of service provision and increases carbon footprint, while a worrying implication of the latter is that an ‘agrarian’ country like Pakistan now has to import large quantities of food items.