Missed targets

The PML-N government has missed most of the economic targets it had set for itself, marking its first year in power with overstated numbers, rejoicing on one-time investment inflows and celebrating multibillion-dollar deals with China. The Institute for Policy Reforms (IPR), an independent think tank established to support policymaking in Pakistan, has found that the PML-N fell short on most of its promises made in the election manifesto, adding that the outlook for the current year also remains uncertain. Dr Hafiz Pasha, the managing director at the IPR and a former finance minister, said that reduction in the budget deficit was the only target met by the government. While there was some improvement in certain areas, including the tax-to-GDP ratio, progress remained below the desired level. The fiscal deficit had been reduced substantially, but according to Dr Pasha, the “work of creative accounting cannot be ruled out”. Additionally, there was a decline in economic growth, as well as persistent inflation, low recovery of electricity bills and high unemployment that shaped Pakistan’s economic performance. It is clear that the government has a short-term approach towards solving problems facing the economy: relying on loans, as well as grants from friendly countries, and a one-time inflow of investment through the spectrum auction.

When the PML-N came to power, armed with a reputation of being business-friendly, much was expected. But very little has been delivered. Foreign exchange reserves may have increased, but they are nowhere near the desired level. The government has even asked for a $400 million loan from the Asian Development Bank to finance layoffs after privatisation, reflecting the country’s willingness to add to its external debt. It is true that the floods, the military operation and the sit-ins have come in the government’s way, but that still does not justify its inability to bring more people into the tax net. There has been little improvement in decreasing load-shedding. The decline in investment means there is an absence of a trigger that will drive growth. The IPR’s findings may have been critical, but they reflected the government’s inefficiency, which has a long way to go before it begins to solve the economic woes of the common man.

Published in The Express Tribune, November 23^rd, 2014.

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