KARACHI: Although there are a few positive financial indicators, on the basis of the Pakistan Tehreek-i-Insaf’s (PTI) one-year performance in government, it is “less” likely that the ruling party will keep the promises that it made in its manifesto.
This was the crux of the arguments presented by Dr Nadeem Javaid, former chief economist, government of Pakistan, in his lecture on the subject ‘Evaluation of a year of performance of the current government: challenges, successes and failures’ organised by the Applied Economics Research Centre (AERC), University of Karachi, on Monday afternoon.
Dr Javaid began his talk by underlining the PTI manifesto with which the party sought to garner public support during the general election. It featured points such as creating 10 million jobs, building 5m housing units, making Pakistan business friendly, transforming key economic institutions, building a knowledge economy, strengthening international trade, CPEC engagement, reforming FBR, fixing energy challenges and revitalising the textile industry etc.
This was the programme that was presented to contest elections on, and people, particularly the youth of the country, voted for the party.
‘Those who do not own assets are the hardest hit by inflation’
Dr Javaid then went back a bit to compare the fiscal trends in the country. He said in 2013, when the Pakistan Muslim League-N came to power, the GDP growth was around 3.7 per cent, and by 2017-18 it was 5.8pc. The target that the Planning Commission set for the next year was 6.2pc. But when the interim set-up came for three months things were halted. From there on things started to get worse.
Dr Javaid told the audience, which consisted largely of students of economics, that the composition of the GDP (2017-18) was 60.23pc contributed by services sector, 18.86pc by agriculture and 20.91pc by industry. It may seem simple but it’s more complex than it appears, because approximately 70pc of tax is collected by industry; agriculture one per cent and services (60pc of total economy) do not fall under the federal government. In one year (2018-19), the GDP growth has dropped to 3.3pc. With such a growth “it is less likely to create the desirable level of jobs and collect tax”.
After that Dr Javaid gave a detailed description with facts and figures about factors such as manufacturing growth, per capita income, government domestic debt, government external debt, expenditure trends etc to compare where things were in the past few years and where they stand now.
On the subject of social indicators, the economist said Pakistan’s population growth rate is 2.4pc. The expenditure on education (allocated in the budget) is 2.3pc and on health 0.8pc. Unemployment and inflation are on the rise. “Those who do not own assets are the hardest hit by inflation,” he remarked. Pointing out the structural challenges faced by the economy, Dr Javaid returned to the issue of demographics saying that in 1951 Pakistan’s population was 33m and in 2017 it’s more than 200m. He said official figures suggest that our population is 63.6pc rural and 36.4pc urban. “We need to redefine our urban boundaries,” he stressed. Karachi in the documents is still referred to as a peri-urban area. There’s no clear policy on migration from rural to urban areas. We have no population policy and no land-use policy since 2006. If the trend continues, by 2051 our population will be 416m.
Dr Javaid said the political economy of growth that he had highlighted indicates that it will be less likely for the PTI to create 10m jobs and 5m housing units. Some steps have been taken to make Pakistan business friendly. A positive thing has happened on the international trade front with a deal being struck with Turkey. CPEC’s first phase is complete but in the second phase there are issues on both sides. There’s no clear strategy on the energy challenge, too. And the only reform with respect to FBR is that its chairman was removed and replaced by another man.
Dr Javaid warned of tougher times ahead if the situation is not handled “adroitly”.
Earlier, director AERC Dr Samina Khalil welcomed the speaker.
Published in Dawn, September 17th, 2019