The PPP’s terrible economic performance

Published: November 6, 2012
Email
The writer is a member of the PML-N’s media and manifesto committees and a former CFO of IBM Middle East & Africa Region

The writer is a member of the PML-N’s media and manifesto committees and a former CFO of IBM Middle East & Africa Region

In my last column, I briefly mentioned the dismal economic performance of the present PPP government. After the article was published, many of my PPP friends called and challenged the basis of describing the economic performance dismal. Under what rationale they questioned the bad performance is not clear to me. The PPP’s performance has not just been bad but dismally bad and I would call it the worst economic performance by any government since our independence. The following macro-economic indicators will demonstrate my point.

GDP growth: Average GDP growth during 2008-12 has been 2.9 per cent. Never in our history has the growth for any four-year period been so low. Let us compare Pakistan’s GDP growth with other countries in the region during the same period, which were as follows: India 7.8 per cent, Bangladesh 6.8 per cent, Sri Lanka 6.1 per cent and Pakistan 2.9 per cent. Most economists would agree that in order to progress and for people to survive above the poverty line in Pakistan, nothing less than a six per cent sustainable growth rate is required.

Inflation: Except for the last two to three months, inflation has remained in double digits during the entire period of this government. Looking at this from a historical perspective, this has been the second worst period since 1947, as far as inflation numbers go. Only once in our history we had a higher inflation over a four-year period and that was during the first PPP government in 1972-77. Compared with us, India had single-digit inflation throughout much of the same period. Pakistan’s economic managers cannot complain of high oil and other commodity prices for its high inflation numbers.

Tax-to-GDP ratio: When the PPP came in power in 2008, the tax-to-GDP ratio was 10 per cent and the plan was to increase it by one per cent each year so that by 2013 it would be a healthy 15 per cent. At present, the ratio is less than nine per cent, which would rank Pakistan among the worst in the world. This helps explain why the present government has been unable to deliver in terms of investment in social sectors and infrastructure projects. There is no rocket science here — you either increase the revenue side or reduce the non-development expenditure or ideally a combination of both.

Budget deficit: Last fiscal year, the budget deficit was at an all-time high of approximately seven per cent but even more alarming is the forecast for the present fiscal year, which is expected to see a budget deficit in the range of eight to nine per cent. What does that mean for the economy? In terms of actual rupees, it means a deficit of more than two trillion, which will largely be filled in through borrowing from the central and commercial banks. It has adverse effects too. This will crowd out the private sector simply because the commercial banks would not have much to offer to the private sector and in any case, it is much easier to lend to the government without taking any risk.

Investment-to-GDP ratio: In 2008, this was 23 per cent, which has now come down to 12.5 per cent — the worst for more than 30 years. A 10 per cent drop in this ratio simply means approximately 20 billion dollars in terms of lost investment.

The numbers speak for themselves. All other indicators are also negative. Public debt has more than doubled in the last four years. State institutions such as Pepco, PIA, the Railways and the Pakistan Steel are all making huge losses (around Rs400 billion every year). Pakistan is facing the worst energy crisis in its history and no improvement is evident. The privatisation process is almost at a standstill.

The economic situation is grim, to say the least and there is a general perception that the situation is unlikely to improve, since no structural reforms are planned and in any case, it is too late to initiate any such reforms.

With such a miserable economic performance, any chance of the PPP being returned to power in the next election looks almost impossible.

Published in The Express Tribune, November 7th, 2012.

Facebook Conversations

Reader Comments (23)

  • tahir
    Nov 6, 2012 - 10:06PM

    democracy is the best revenge and now we r paying

    Recommend

  • Liberal
    Nov 6, 2012 - 10:08PM

    Well Mr Zubair you are right .. but lets vote for PPP again otherwise Taliban khan will come into power

    Recommend

  • Asad Malik
    Nov 6, 2012 - 10:10PM

    Are you kidding? PPP has a strong chance of coming back unfortunately. I was genuinely shocked after the results for the 08 elections came out. I was counting on people to vote based on the last couple of years when we actually made progress. But I guess our illiterate public, along with the pseudo intellectuals still believe in ‘democracy’ and wanted to rid Pakistan of an ‘evil dictator’ LOL

    Recommend

  • NO BS
    Nov 6, 2012 - 10:16PM

    PML N has under performed even the PPP government performance. Read the report by experts including Dr Shahid Burki, Hafiz Pasha and PMLN’s very own Sartaj Aziz
    http://ippbnu.org/files/5AR2012.pdf

    Recommend

  • Habit
    Nov 6, 2012 - 10:21PM

    You don’t need such elaborate numbers to see where we are heading. Vist markets,speak to traders and industrial people and you would know how bad itis. Numbers don’t always tell the real story, reality may be even worse.

    Recommend

  • Nadir
    Nov 6, 2012 - 10:31PM

    “With such a miserable economic performance, any chance of the PPP being returned to power in the next election looks almost impossible.” You are conveninetly forgetting that the PPP never won an outright majority in the previous election and the government functions as a coalition. Where is the criticism of the coalition members? As for your statement, it is not for your to decide what the numbers say or mean or preempt what voters may decide at the polling booth. Not to mention that quoting statistics here and there leads to spurious conclusions. Perhaps with more insight you could have expanded on how the PML-N led Punjab government has contributed to this state of affairs?

    Recommend

  • Alpha
    Nov 6, 2012 - 11:20PM

    Arnt u Asad Umar’s brother ????

    Recommend

  • Nasir
    Nov 6, 2012 - 11:26PM

    Besides all the odds & poor performance. PPP will get in Power, unfortunately.
    Main reasons are; poor performance of PML-N and other parties, large portion of Pakistan’s population is still dodged with the hope that PPP will bring change vis-a-vis Roti, Kapra & Makan with the topping of Bhutto & so-called Shaheed BB sahiba etc etc…. Our general public is so illiterate & ignorant that they will vote PPP again & again… unless we become educated & have our own opinion & view point.

    Recommend

  • Lahori
    Nov 7, 2012 - 12:10AM

    @Nadir: true, not only was PPP involved the coalition was too.

    Recommend

  • Parvez
    Nov 7, 2012 - 12:26AM

    Agree .The handling of the economy over the last almost 5 years can be summed up in one word -criminal.

    Recommend

  • Arifq
    Nov 7, 2012 - 12:28AM

    Economic statistics appeal to the English speaking minority whereas the majority rural voters, beneficiary of commodity price boom with no taxes will be deciding the fate of elections.

    Recommend

  • Aviator
    Nov 7, 2012 - 6:10AM

    Why did people vote for the PPP? For what reason?

    Recommend

  • Polpot
    Nov 7, 2012 - 8:16AM

    Pres Zardari has been attending countless International Fora advocating his vision of Regional Prosperity & Development.
    ++++++++++++++++++++++++++++++++++++++++++++++++++
    With new roads, railways and ports and joint ventures ushering in untold riches.
    As a matter of fact he has blown up a small fortune in these attendances.

    Why blame the poor guy’s govt?He has the vision but no intention !

    Recommend

  • confused
    Nov 7, 2012 - 10:26AM

    “The writer is a member of the PML-N’s media and manifesto committees and a former CFO of IBM Middle East & Africa Region”

    Sir do you remember PML-N’s economic performance? If not for Musharraf, Pakistan would’ve been a failed state. Nawaz left with more money in his bank account ($2 billion+) than Pakistan’s forex reserves ($1.9 billion)! Pakistan was almost bankrupt, with only $1 billion foreign direct investment. Why don’t you write an article about Nawaz’s horrendous performance?

    http://en.wikipedia.org/wiki/EconomyofPakistan#Theeconomytoday

    Recommend

  • ishrat salim
    Nov 7, 2012 - 2:37PM

    @confused:
    u r right…spot on….especially when PML N was voted into power with absolute majority…a record still intact, even then what was their performance….at the tail end, NS pleaded for ” dollar bhego mulk bachao “…why ? if their performance was any worth this pleading was not necessary….

    Recommend

  • mnn
    Nov 7, 2012 - 5:09PM

    I’d like someone to convince me that anybody else in power could have performed better given the circumstances we’ve faced in these last few years. I’m no jiyala. I just want to hear something realistic that addresses the topic in a non-partisan way. This article does not acknowledge even in passing that circumstances have been difficult.

    Recommend

  • Azeem Aslam
    Nov 7, 2012 - 6:31PM

    “With such a miserable economic performance, any chance of the PPP being returned to power in the next election looks almost impossible.”

    “No Doubt”
    Current Govt. is desperately incapable, corrupt and worst in Pakistan’s history.

    Recommend

  • ishrat salim
    Nov 7, 2012 - 6:56PM

    @Arifq:

    very true….that 53 % from rural area will decide where feudal lords,Sardars, tribal system & beradari system shall prevail who will then decide the fate of this nation….

    Beside, political compulsions plays havoc on governance issue…..

    Recommend

  • hamza khan
    Nov 7, 2012 - 9:03PM

    @mnn:

    what circumstances? things were bad before the musharraf government lost elections. the economy had already started to show signs of strain. the global economy was struggling, but pakistan is not a big player in the global economy anyway so that would not have affected us that much. oil prices have been up and down, but that too can be countered liek it was in the summer of 08. but for that the government has to have a plan? maybe you can tell me what exactly the governments economic plan or vision was? or one notable developement that occured in this tenure. the answer is maybe other political parties could have done better or not. the point is this government has done a lot worse than the previous government. as someone stated, my question is why did we get rid of the ‘dictator’ who gave us jobs, employment, education, health, better standards of living? all pakistanis should be asking this question.

    Recommend

  • Shazia
    Nov 9, 2012 - 12:55AM

    I admit performance of the PPP government was not ideal, but it has set new standards ofpolitics in a feudal society. Millions of hardcore poor have been awarded by employee’s stock scheme. First time in the history of Pakistan the poor workers became partner in the profit oforganization. Countless homeless got free piece of land for a shelter. Education, first time in history got in to access of underprivileged. The bureaucracy became answerable to people and first time traditional power centre shifted from feudal to masses. As people got voices and realization of their right, the democracy became a platform where they can share power. This support base is purely an outcome of party performance and pro-poor policies which still makes its major vote-bank. This party does not has any direct conflict with Socialists, rather it acts in their support for secular, liberal and more equitable society.Recommend

  • Nasir
    Nov 12, 2012 - 12:26PM

    @Shazia:
    This is the problem that we always want others to look through our eyes…. the so-called achievements you have mentioned including Stock Scheme/Profit Sharing, Free Homes and Education (if any) are based upon the intentions of diverting & fooling the people to vote for PPP. ZAB was the first person who used Private businesses for his vested interest by Nationalizing the industry, banks & education in 70’s. The result is that uneducated masses of Pakistan are blindly following the ill-philosophy of Roti, Kapra aur Makan. PPP has most of the time looted the business community and has gained power & votes over dead-bodies but not on the bases of Performance. This time again, PPP will get the power as masses are with them as usual besides being drowned twice in floods in Sindh, they will still vote for the dead-bodies.
    On part of Education, please Google ghost schools & you will find Sindh topping the list… so what education you are talking about???
    Lastly, your appreciation for “This party does not has any direct conflict with Socialists, rather it acts in their support for secular, liberal and more equitable society.” has raised the question about your understanding & knowledge about Socialism. Can you give just one example where socialism has succeeded??? it doesn’t exist in the country which was used as the launching platform for socialism.

    Recommend

  • ishrat salim
    Nov 13, 2012 - 11:41AM

    @Aviator:

    PPP won on sympathy vote after BB killed…..

    Recommend

  • ishrat salim
    Nov 13, 2012 - 11:47AM

    @Shazia:

    Which profit organisation ?…pls indicate…is there any organisation which is making profit today ?..if so, how does a poor guy gets to know what profit that organisation made & what is his share ? & how does he get it ?

    Recommend

More in Opinion