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How realistic is it?

Published Aug 26, 2012 10:06pm


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THE economic plan unveiled by the Pakistan Tehrik-i-Insaaf touches on the right issues, but carries the same weaknesses that the manifestoes of its rival political parties do: it is rich in sentiment but poor in substance, tall on promises but short on credibility. The framers of the vision are quite right to say that “business as usual is not sustainable”. They are right to point out that the governance failures of the present government have resulted in a doubling of per capita public debt, record high fiscal deficits, persistent double-digit inflation, sharply growing power shortfalls, and depleting foreign exchange reserves (although it’s hard to see how much of this depletion could have been avoided given persistently high oil prices). The programme is strong on the reform of public-sector enterprises. All this is fine and testament to the first-rate talent that has helped the PTI draw up its programme. But what exactly does the party intend to do about the dismal state of affairs that it describes so well?

That is where the problems begin. For starters, consider this. They claim they will raise “welfare spending” to Rs4.6tr, compared to present-day disbursements of Rs0.9tr. They claim they will cut the deficit and free up bank resources for investment by industry. They claim they will resolve the power crisis by diverting fuel to power generation. They claim they will bring down inflation to seven per cent. Yet they have opposed tax reforms in the past, vilifying the RGST, or reformed general sales tax, as evil. Where will the money come from to pay for the expenditure hikes and deficit cutting? Will industry grow if it is deprived of gas? They promise a muscular effort to recover looted wealth. Remember when the Musharraf government went on a rampage to recover loans and looted wealth in their early years, causing business confidence to plummet? What lessons have been learned from that experience? At the end of the day, the economic plan almost reads like a wish list drawn up by somebody who thinks complex problems have simple solutions.

Comments (8) Closed

M. Asghar Aug 27, 2012 06:43am
The Editorial's hammer comes down rightly on a lot of points of the PTI's programme but at the same time its attitude towards the recovery of the "looted wealth of he country" by different persons or institutions is incomprehensable.
Iftikhar Husain Aug 27, 2012 12:14pm
Very rightly observed by the editorial where the money is coming from not the looted money is coming back very easily it has to be created with in the economy by cutting expenditure and taxing the people who do not pay taxes. PTI must rethink its economic policy.
maera Aug 27, 2012 06:42pm
Do we have really any solution?
zakria Aug 27, 2012 09:34am
hasib Aug 27, 2012 05:20am
the party didnt came in power yet! we should give them a chance,, lets see
Falcon Aug 27, 2012 06:41am
I don't know where are you pulling the numbers from, but I will go with the fundamentals: PTI plans to increase fiscal space by 9% by increasing tax-to-GDP ratio (5%), austerity measures (2%), and reduced GSE bleeding (2%). This additional 9% will be be split for increased social spending (5.5%) and reduction in current fiscal deficit (3.5% - reducing from current levels of 8% to 4.5%). It is to be noted that PTI has not claimed to eliminate fiscal deficit, only reduce the deficit to manageable levels. For taxation, all PTI is suggesting is to get rid of all key exemptions (such as agriculture / services) that are politically motivated. Furthermore, provincial accountability for taxation should be increased from current levels of 0.5% to include key sources of taxation such as urban property (at least more than few percent in contribution, as is the case of India). This can easily add up to additional 5 - 6% to tax-to-GDP ratio even from the other independent estimates I have seen. How is that unrealistic in your view?
Syed Ahmed Aug 27, 2012 01:33am
Gen Musharraf should have gone after the money launderers in the first phase and than the tax evaders.
Mystic Aug 27, 2012 05:19am
Has anyone ever bothered to read PPP's manifesto before the last elections? They have not done a SINGLE thing written over there. No issues with that! Amazing!