Former Prime Minster Imran Khan says if returned to power after the elections, he would have no choice except to support the role of the International Monetary Fund (IMF) in stabilising the country’s economy.
Some idea of how the PTI leadership would go about dealing with the lenders has been provided by Mr Shaukat Tarin. According to the PTI chairman, he will be the federal finance minister if his party formed the next government.
Pakistan will request multilateral organisations such as the IMF, World Bank and Asian Development Bank for an extended and enhanced programme of $8-10 billion over the next three years. This, believes Tarin, requires restoring creditability by immediately restoring the IMF programme.
Then PTI, he added, would have to immediately enter negotiations for debt restructuring with international and domestic creditors, including local commercial banks.
Divisive elitist politics is opening up space for agents of change to strike at the roots of the country’s social, economic and political landscape
Pakistan received foreign loans of merely $5.6bn during the first half of the current fiscal year, or about 25 per cent of the budgeted annual estimate, as both bilateral and multilateral lenders are reportedly waiting for the resumption of the IMF programme.
The shrinking foreign loans will not be enough to repay debts. On January 27, Mr Tarin pointed out that the rupee had dipped 34pc against the dollar only in the previous two days, which would add Rs4 trillion to the national debt.
According to an analyst, the free fall of the rupee will trigger hyperinflation and result in economic growth declining to negative 1pc this fiscal year. And to quote economist Asad Ejaz, ‘deflationary trends somewhat caused by policy rate are offset by inflationary pressures of the rupee devaluation.’
And what is puzzling is that the central bank and Pakistan Bureau of Statistics have stopped publishing the national core inflation rate. In its reports, the State Bank of Pakistan (SBP) occasionally mentions not-so-important urban and rural core inflation rates selectively. The government has also hiked drastically prices of petroleum products as agreed with the IMF, further fuelling inflation.
PTI Chairman Khan says the IMF programme would be a part of his government’s ‘radical plan’ to shore up the country’s economy. While a well-conceived plan for a turnaround of the economy is badly needed, the historical record showed that the country’s five–year development plans had been replaced by the 3-year 22 IMF programmes, of which only one was fully implemented.
The ongoing IMF deal, which is politically divisive, is suffering from hiccups. It would be challenging for PTI to evolve a realistic plan and ensure its implementation, but the effort would be worthwhile.
The considered view of analyst Syed Shabbar Zaidi is that the so-called manifestos of those parties that ruled between 2002 to 2022 did not reflect realism. He noted that Pakistan’s social and economic indicators went from bad to worse after every regime. “As a nation,” he argued “we are doing everything except development economics.”
The PTI’s unfinished agenda of privatisation of state-owned enterprises will be the top priority if the party returns to power, says Mr Tarin. The previous two governments, PML-N and PTI, failed to privatise bleeding state units, while PPP was opposed to the move. No doubt billions of rupees of taxpayers’ money could be saved if the loss-making state-owned units are privatised. That could reduce fiscal deficits and enable the country to get rid of some of its debts.
Eying the current economic scenario
Mr Tarin says, not only will the economy not create opportunities for the two million youth entering the workforce every year, but according to various estimates, nearly 10m workers are at risk of being laid off. For too long, he laments, the masses had waited for the dividends of economic growth to trickle down. “Trickle down is a lie. PTI wants to bring a bottom-up approach that focused on Pakistan’s poor.
In fact, billions of people around the world, including Pakistan, are under severe stress, facing risks of climate, food security, supply chain, job and national security. However, in developed states, literature on social science and development economics is churning out innovative ideas for creating a new people-centric social order.
In an interview with Bloomberg, Imran Khan reiterated that his government will pursue an independent foreign policy that doesn’t lean on any single country, such as the United States or China. Later he expressed fear that the state of the economy could put Pakistan’s national security at risk. “Those who bail out, ask for a price. IMF has asked Egypt and Sri Lanka to reduce their armies. It can ask us to do the same.”
Mr Khan also admitted that the entire political status quo was against him. ’Right now, I am afraid, I have powerful enemies.“ But there is a growing view that a segment of the elite and the middle class and youth — with a strong presence in the PTI — is emerging as an agent for change. Aware of social change, youth is making targeted attempts to improve their socio-economic position, says an eminent analyst.
One may add here that the divisive elitist politics is opening up space for agents of change to strike at the roots of the country’s social, economic and political landscape. It has become a normal practice for major parties to form coalition governments with smaller parties focused on local and regional issues. We have a more vibrant, assertive society now seeking change. Independent economists, social activists and politicians are challenging conventional wisdom.
A former prime minister and PML-N leader Shahid Khaqan Abbasi told a news conference in Peshawar that the National Dialogue on Re-imagining Pakistan — a purely non-political forum — was constituted to highlight public issues. Its organisers belonged to leaders of both ruling and opposition political parties.
Speakers at the first Reimagining forum meeting in Quetta stressed that Pakistan’s current political system is ‘ill-equipped’ to resolve the issues faced by the country’s 230m people.
Published in Dawn, The Business and Finance Weekly, February 6th, 2023