A dis­mal score­card

The Pak Banker - - FRONT PAGE -

What is the eco­nomic per­for­mance of the five-year ten­ure of the PML-N govern­ment? The of­fi­cial claim is that growth rose to 5.8 per­cent in the cur­rent year against a growth of 3.68 per­cent in 2013 while in­fla­tion rose by a mere 3.77 per­cent in­stead of 7.75 per­cent in 2018.The bud­get deficit de­clined from 8.2 per­cent in 2013, to a low of 5.8 per­cent in 2016-17. Pak­istan, un­der the three-year (2013-16) In­ter­na­tional Mone­tary Fund pro­gramme, raised revenue con­sid­er­ably (from 2.5 tril­lion ru­pees in 2013 to 3.95 tril­lion ru­pees in the cur­rent year - a rise of 56 per­cent). Devel­op­ment expenditure was 5.1 per­cent of GDP in 2013 and in the first four years, it was lower at 4.9 per­cent, 4.2 per­cent and 4.5 per­cent, how­ever, by 2017 it was slightly higher at 5.3 per­cent. Pri­vate in­vest­ment as a per­cent­age of GDP in­creased from 9.8 per­cent in 2013 to 10.4 per­cent in 2014-15 down to 9.8 per­cent ac­cord­ing to pro­vi­sional es­ti­mates of 2017-18 ver­i­fy­ing the coun­try's de­cline in the World Bank rank­ing in ease of do­ing busi­ness - from 110th place (out of 190 coun­tries) in 2013 to 147th as per the lat­est re­port

But the PML-N govern­ment failed on many fronts. The level of gov­er­nance of PML-N has been worse than dur­ing the PPP-led coali­tion govern­ment and this is ev­i­dent from the woe­ful in­ef­fi­ciency of public sec­tor en­ter­prises (PSEs). Pri­vati­sa­tion, a man­i­festo prom­ise by the PML-N, fo­cused on sale of profit-mak­ing units and lit­tle or noth­ing was done to re­struc­ture and be­gin sale of loss­mak­ing units. A lower rate of in­fla­tion has been due to the dras­tic de­cline in the in­ter­na­tional price of oil, from a high of over 140 dol­lars per bar­rel in June 2008 to a low of 20 dol­lars per bar­rel in Jan­uary 2016.In 2013 sav­ings rate was 13.9 per­cent of GDP but it de­clined to 11.4 per­cent by 2017-18. As a re­sult, the gap be­tween sav­ings and in­vest­ment widened dur­ing the ten­ure of the PML-N govern­ment which ac­counts partly for the rise in govern­ment do­mes­tic debt from 9.5 tril­lion ru­pees in 2013 to over 16 tril­lion ru­pees this year (a rise of 68 per­cent).Ex­ports de­clined due to an over­val­ued ru­pee that made our ex­ports un­com­pet­i­tive. Im­ports rose­from 41 bil­lion dol­lars in 2014-15 to 48.6 bil­lion dol­lars in 2016-17 and to­tal im­ports reached 45 bil­lion dol­lars by April this year (in spite of a de­cline in the in­ter­na­tional price of oil from a high of 140 dol­lars per bar­rel in 2008 to less than half that rate for the bulk of the PML-N's ten­ure).

No doubt, the PML-N govern­ment has in­creased gen­er­a­tion by 10,000MW but it failed to un­der­take a holis­tic as­sess­ment of the sec­tor. Trans­mis­sion sys­tem was not up­graded con­cur­rently even though in 2012 the then Sec­re­tary Water and Power Min­istry had warned that the trans­mis­sion ca­pac­ity of the net­work was lim­ited to 15000MW. This ac­counts for fre­quent trip­ping at present. The power sec­tor per­for­mance was not the fo­cus of the PML-N, ac­count­ing for the cir­cu­lar debt ris­ing to lev­els higher than what it in­her­ited in 2013. At present the cash-strapped trea­sury can­not re­lease funds to re­move the fi­nan­cial bot­tle­necks in the sec­tor - rang­ing from im­port of fuel to trans­mis­sion of elec­tric­ity. Bor­row­ing has been the or­der of the day which has raised the cost of elec­tric­ity for house­holds and in­dus­try/com­mer­cial units and has been an­other im­ped­i­ment in our ex­port growth. All in all it was sorry per­for­mance by PML-N govern­ment on the eco­nomic front.

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