Islamabad Politics Report/ Moazzam Raza Tabassam: The Pakistan Peoples Party rejects the PMLN claims on the economy in the Economic Survey Report as the macroeconomic fundamentals were derailing fast due to shortsighted policies of the present government.
It has also repeatedly alerted the government against presenting the 6 th budget although the government has a term of 5 years. This is legally improper and in the election year is tantamount to pre-poll rigging.
PPP Parliamentary Party will be meeting to discuss what our strategy would be to block the
government from presenting what we consider an irregular budget
Pakistan People’s Party deems it unfortunate that the government has come up with cherry picked information to paint a favorable picture of the economy in the Economic Survey 2017 – 18 announced yesterday which makes a mockery of the ground realities and the economic challenges the country is facing today.
The Economic Survey begins with a misleading phrase “Pakistan has made great strides in improving its economic outcomes and reducing its macroeconomic vulnerability in the recent years”.
In reality, the “Mujhe Kyun Nikala” focused government has only given increased income inequality, a deepening debt trap, a gaping current account deficit, fast drying forex reserves making the projected growth unsustainable.
The state of the economy can be gauged by the fact that the rupee lost more than 10 per cent
of its value in a free fall in 3 months, and even now unstable hitting 118rupees to a dollar. It is
clear that there was insider knowledge of the fall of the rupee and many must have made a quick buck out of this move. For more than 3 years, for political gains, exchange rate was artificially being maintained by Mr. Dar which even the current Adviser to PM on Finance admits to. The Petrol prices have been raised 3 times in 3months.
In fact the macroeconomic vulnerability has only increased and it is feared that the present
governments burdens will be inherited by the next government which may have to go to
international agencies for assistance.
The Current account deficit is high and exports have fallen. It is estimated the overall deficit
could be around $15 billion by the end of 2017-18 if the current trend persists. PPP government had brought current account deficit down from $13.87 billion to $4.658 billion during its tenure.
Pakistan’s imports are at close to $60bn where as exports event with the present growth will remain at $23bn. During PPP’s tenure, despite highest oil prices at $120/barrel and adverse global financial impacts, PPP managed to control imports.
It is also worth mentioning here that PML – N In its election manifesto had promised to increase
the economic growth rate to 6 per cent by the end of the fourth year, and 7 per cent by June 2018.
The Economic Survey quotes GDP growth at above 5 during the last 2 years being 5.70% during the outgoing fiscal year and 4% in its first 3 years of government.
Based on the country’s economic position, IMF has projected Pakistan’s external debt and
liabilities to peak up to $144 billion in the next five years from $93 billion currently and total debt at Rupees 23tr. In contrast with the increase in debt, courtesy the economic policies of the PML – N government and Darnomics the repayment capacity of the economy is not poised to increase at the same rate as the increase in debt. The government has admitted that the Debt to GDP ration has violated the Fiscal Responsibility and Debt Limitation Act 2005 by 9 per cent
at 69 per cent of the GDP.
A more disturbing trend is that high interest commercial loans increasingly finance external
borrowings, as the government is borrowing commercial loans from international market.
In FY 18 it is estimated that 48% of fiscal deficit will be met by external finance. In FY 17, borrowings
of Eurobond, Sukuk, and from commercial banks was 48% of total external disbursed loans. This
figure grew to 64% in July-December FY 18. In FY 13, this figure was zero.
Further according to data for July-December 2017-8, 58 per cent of all development and
current expenditure was in debt servicing.
The Foreign exchange reserves are also at a dangerous level estimated at 13bn dollars dropping
by 4 bn in one year.
Sharif brothers have been terming CPEC power projects as the knight in shining armour for Pakistan’s loadshedding problem. Focusing entirely on generation, they failed to address the structural issues in the power sector and yet today the power sector has a trillion rupee circular debt. However many plants are working under capacity because the growth in power consumption is only 1 per cent, which defies all sense.
The PSE debt has also risen to over 1 trillion rupees. Interestingly these debts are not reflected in the overall all debt.