Cascading bad decisions blamed for economic morass

Experts say govt lacks policy to sail country out of rough waters

LAHORE:

As the federal government hurls allegations at the former ruling PTI for the economic crisis in the country, political and economic experts said a series of bad decisions taken by the Centre are to be blamed for.

However, the incumbent government oscillates between denying the existence of any economic crises to blaming it all on the PTI government for creating an air of political uncertainty that they claim landed the country in financial turmoil.

Dr Qais Aslam, a professor of economics, said: “Political instability is not to be blamed for the mess this government has landed us in. In theory political stability is important for economic growth, but the situation is different in our case. There is this real risk of default, and we might be bailed out yet again.”

He said given that “we are a nuclear power with a mammoth army, IMF will not let us default”.

He said that in the meantime if friendly countries extend any olive branch, “we might even dodge the inflation storm, but all this will only provide us with some breathing room, post that we will be back to square one”.

He said that this government does not have any practical fiscal policy what so ever. “Our growth rate is precariously low, even less than our population growth rate.”

He said normally growth rate of any country should be double its population growth rate, for it to remain stable.

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“Our inflation has gone through the roof. Then comes the question of our depleting assets. We are fast heading towards becoming a failed state. We don’t have dollar for essential imports and paying airlines. We don’t have any import, fiscal and business policy.

“Our fiscal and monetary policies are both contractionary in nature. We are driving businesses out of the country. We are forcing dollar to be smuggled in and out of our country. We are okay with smuggling but not okay with releasing dollar for genuine trading.”

He said that all governments, including the PTI, kept their focus towards a privileged class. “Though in the PTI case, from poverty alleviation programme to health card, some focus was given to the underprivileged segment of society. He said that there are a host of things that PTI did wrong, but the fact is that they left country with six per cent growth rate. They had provided an avenue to the expatriates for sending dollars which brought in $30 billion.

He said that it seems that PDM is only working for black marketers, which was why they were given a free pass to do whatever they desired. “Despite the economic downturn, malls, high-end eateries and other areas where rich wine and dine are packed with customers, which reflects that a segment of society is making money in this time of crises.”

He said the government should withdraw the legal immunity given to the State Bank, noting that it was the SBP that played a vital role in nourishing the speculation market. Secondly, he said amnesty given to the housing sector should have been continued as it brought black money into formal economy. And lastly, he said that this government should have prepared an economic plan.

He said that in the coming days, new taxes would be imposed which would further shoot up the inflation.

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Renowned political analyst Prof Hasan Askari said that this government had no economic plan, adding that they had been following a reactionary policy course form the get go.

“Reactionary policy means firefighting that is whenever some problem turns into a full blown crisis, they swing into action to try to address it. They lack initiative, they have consistently failed to forecast any problem, let alone bringing in place a policy in anticipation of any forthcoming crises.

The economic problems that were there during the PTI’s tenure accentuated during the PDM’s tenure.

The dollar-rupee parity as well as import and fiscal policies were issues that the incumbent government should resolve and not the opposition.

Dr Salman Shah, an economist, who had severed with the PTI provincial government, said: “Political instability means that difficult decisions are being put on hold by the government to save itself from backlash, but that does not absolve it of the responsibility.”

He said taking a decision for the betterment of the country was the core duty of the government and not the opposition. “Political instability does not justify government ineptitude.”

He said even the IMF referring to the political instability in the country highlighted the need for a stable government.

He said the reason why the situation all of a sudden went bad post-2018 was that the PPP and the PML-N had chosen to take huge amounts of foreign loans since Musharaf left with only $38 billion worth of foreign loans.

He said both the governments brought in truckloads of loans for infrastructure development work which even kept the dollar stable. He said post-2018, the government did course correction, which effected the dollar-rupee parity. He said these massive loans that the country took had to be paid back along with interest that too in dollars, putting further strain on the reserves. The damage this government has done to the industries will take years to heal.

Qamar Zaman Kaira, the adviser to the PM, said that there were no quick fixes in the economy. “Policies once executed take time to bring results. We are reaping the results of the PTI’s policies.”

The PTI told the public that total exports during their tenure was $30 billion but they did not want the people to know that the imports during their tenure was $80 billion, he said, adding that this imbalance created a crises that was now haunting the country.