As the PML-Nawaz government transfers power to a caretaker set up later this week and returns to the electorate, a cursory look at its five-year tenure presents a mixed bag of successes and failures on its promises and the major challenges it inherited.

There is no doubt that Pakistan is stronger in terms of macroeconomic fundamentals in May 2018 than it was in May 2013, even though key underlying weaknesses remain unchanged.

The political institutions are as vulnerable, if not more, today as they were five years ago despite the completion of the constitutional term of a second political government in a row but without any elected prime minister completing his term. That in itself explains the difficult circumstances in which political governments have to deliver on economic challenges.

On the positive side, crippling energy crises and security problems are no longer the top most challenges facing the nation — both still remain pain points to a lesser degree — and the national economy is on a growth path.

There is no doubt that Pakistan is stronger in terms of macroeconomic fundamentals in May 2018 than it was in May 2013, even though key underlying weaknesses remain unchanged

It was, in fact, the PML-N’s most promising achievement to have converted the low-growth-high-inflation cycle of the PPP into a high-growth-low-inflation mode, thanks partly to heavy Chinese investment.

Lucky to have found low oil prices and better water availability all along, the PML-N can rightly claim credit for the highest GDP growth in 13-years, of 5.8pc this year, with a less than a 4pc rate of inflation. Before 2013 average GDP growth rate was 2.9pc GDP with double digit inflation.

The party, frankly, has a robust report card to be rewarded by the voter in a fair electoral process

On the downside, a voluminous external account deficit, higher fiscal deficit and continuously bleeding public sector entities stand out as the weakest areas and unfinished agenda of the decade.

The PML-N had put its focus on the so called four Es that included economic revival, energy security, elimination of extremism and education when it went to polls more than five years ago.

As a part of its economic revival plan, the PML-N promised bringing fiscal deficit down to four per cent in five years by increasing tax-to-GDP ratio from nine to 15pc, cut expenditure and reduce Public Sector Enterprise (PSE) losses from Rs400 billion through revamping and privatisation.

Five years down the road, the budget deficit remains at 5.5pc (with question marks on what items stay off the books) almost at the same level as in 2012-13 based on an apple to apple comparison. The tax to GDP ratio has improved significantly to 13 per cent but stood considerably lower than the 15pc target.

Non-salary expenditures generally remained under control but public sector losses went on increasing as none of the loss making entities could be reformed, revamped or privatised.

While Pakistan Railways made some headwind and PIA’s fleet improved, its losses and liabilities kept growing to Rs350bn, requiring fresh fiscal injections almost on a quarterly basis. Pakistan Steel was shut down with over Rs450bn liabilities and $2.5bn annual foreign exchange loss to import of steel products.

The burden of bleeding in the power sector, on the other hand, was shifted from the national kitty to the public pocket as falling subsidies under the International Monetary Fund (IMF) programme were swapped with a series of surcharges on consumer tariff.

The effective consumer-end power tariff, therefore, went significantly higher to almost Rs12.50 per unit excluding taxes compared to about Rs9.30 per unit five years ago despite historically lower international oil prices.

The black hole of the power sector kept growing as generation capacity went up from about 15,000MW to about 25,000MW, as about 10,000MW of fresh capacity was successfully inducted into the system without a simultaneous reduction in transformational, transmission and distribution losses that stood stubbornly stable around 19pc.

The improved supplies addressed the shortage problem that had kept the economy hostage for almost a decade, but it also increased the cost of doing business and compromised competitiveness of Pakistani products. This is partly evident from a continuous fall in exports that was contributed by anti-export bias in fiscal policy stance over the past four years.

The party had also promised in the 2013 elections to quick start investment to GDP ratio to 20 per cent in five years from 12pc to expand the economy and create job opportunities. It was able to jack up total investment to about 16.5pc, mainly contributed by public sector development programme and CPEC, but stood significantly short of the 20pc investment-to-GDP ratio.

The outgoing government struggled miserably to materialise its promise to offer special financial products to overseas Pakistanis and convert at least 50pc of the remittances into investments through foreign exchange bonds and dedicated real estate sectors in the capital. The remittances have gone up close to $20bn compared to $14bn five years ago, up almost 40pc, but without going into productive sectors.

The last five years saw a lot of public sector and foreign investments flowing into large-scale infrastructure projects — the centre of the PML-N growth policy — as a number of motorways, power houses and metro-transit systems in large cities materialised.

The N-League had also promised to exploit to their full potential sizeable reservoirs of oil, gas and other minerals but failed miserably to offer even a single oil and gas exploration block for investment in almost five years as its focus shifted to LNG imports. This set the stage for almost 1200 million cubic feet per day (mmcfd), almost equal the existing gas supplying capacity of the Sui Northern Gas Pipelines Limited (SNGPL).

This in fact compromised the viability of gas companies and created a second generation of circular debt as the government struggled to introduce gas pricing reforms.

A price differential between Rs1,100 per unit price of imported LNG and less than Rs600 per unit of domestic natural gas in the system, with huge imported quantities is estimated to have generated Rs30-40bn debt that may ultimately be written off.

This has not only necessitated a demand for almost 80pc increase in weighted average gas price by the gas companies but has already started affecting the industrial base in Punjab where domestic gas is no longer an option.

The PML-N had also promised opening up markets for regional trade to create opportunities for investment, growth and jobs but failed to make any headway with any neighbouring nation, except China where bilateral trade generally has gone to Pakistan’s disadvantage so far.

Published in Dawn, The Business and Finance Weekly, May 28th, 2018