FY21 targets

Pakistan cannot afford to deal with a prolonged learning curve

On Monday, Prime Minister Imran Khan and the rest of the National Economic Council (NEC) will decide on formally endorsing the macroeconomic framework prepared by the Annual Plan Coordination Committee (APCC). The PTI government has proposed a growth target of 2.3% for its third year in power, which — Covid-19 crisis or not — is decidedly low for a developing country.

Heartening and worrying at the same time is a side note that, according to the APCC, growth prospects for the current year were “eclipsed by higher inflation and interest rates” much before Covid-19 had hit the economy. Heartening because they admitted that the government had already failed the economy before the crisis came, and worrying because that same government now has to save the economy from an actual crisis.

Unemployment has already risen to around 8.5% from 5.8% when the government took charge, and is expected to rise further to 9.6% by the end of the next fiscal year. It is also learnt that the Finance Ministry and the State Bank of Pakistan both felt the 2.3% growth target was too ambitious. They suggested that this target should be as low as 1.8%.

The planning ministry, meanwhile, was critical of the government’s hot money policy. While it helped bolster the books for a while, now that it is gone, repayment or rescheduling of external debt maturing this year will become even more difficult.

The prime minister appears to be pinning his hopes on making the economy the lasting legacy of this government. Unfortunately, it will be difficult to rip a victory from the jaws of defeat in the next year or so, despite what the government’s supporters and defenders may say. Will the five-year term look different in retrospect? Maybe, but looking forward, even if we discount the impact of the Covid-19 crisis, economic numbers since August 2018 have been abysmal at best.

As a cricketer, we know, Imran lost his first test series as captain before settling in and retiring as a legendary leader a decade later. But the premiership is not a game. The country cannot afford to deal with a prolonged learning curve. 

Published in The Express Tribune, June 7^th, 2020.

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