Pakistan’s Economic Overhaul – Maleeha Hashmey

Maleeha Hashmey |

The first lesson of Economics is ‘scarcity’ – there is never enough of anything to fully satisfy all those who want it. The first rule of politics is to inevitably disregard the first lesson hands down.

Pakistan – a 71-year-old charming piece of land has had its good and bad days. What has stayed consistently unchanged, though, is the power corridors inhabited by the rulers lacking the ‘political will’ to materialize the promises and vows passionately made to befool the masses, I mean, ‘carry the day of polls’. However, this time around, for a change, the country saw a never-tested before new player having been handed the responsibility of governing the country over to them.

As impatient as the masses may be for watching the tables turn for the country, there are certain key indicators that verily point towards the direction Pakistan is headed towards.

Apparently, what sets the incumbent Government apart from the rest already, is the twenty-two-year prolonged struggle undertaken by their Cricketer-turned-politician Party Chief then and Prime Minister of Pakistan now – Imran Khan – to jolt the nation back to their senses and make them completely aware of their rights and duties as responsible citizens of the country. Looking at the recent political temperatures rising like never before, it appears that the masses only chose to pay heed to the former part while ignoring the latter.

The last 75 days have been quite happening in the land of pure. We saw the lessons taught by PTI to the masses, making their way back to none other than PTI itself. As much as we believe that PTI really meant to bring about all the changes in the next five years, one just can’t deny the unreasonably high expectations of viewing everything fall back into place within the first two months, held by the masses.

Read more: Pakistan Economy’s Progress Card

Perhaps, they spent a little too much of their time watching the famous serial ‘Supernatural’. As impatient as the masses may be for watching the tables turn for the country, there are certain key indicators that verily point towards the direction Pakistan is headed towards. Let’s have a quick recap of what we went through in the previous regimes and what PTI-led Government is doing differently and how?

*Fiscal Challenges Inherited by PTI Government “gifted” by PMLN Government*

• $28,000 Billion was Pakistan’s cumulative debt that PMLN left which shyly stood at approximately $13000 Billion when their PPP-led predecessor Government left. Adding up the heavy debts that all of our state-owned enterprises owe to the state – the sovereign guarantee of which lies on the shoulders of none other than the Federal Government itself – it makes it around $30,000 Billion.
• The current account deficit stands at an all-time high $18 Billion whereas the never-ending circular debt that was marked $500 Billion in 2013 – by the end of the last regime, it stood at $1300 Billion.
• The former Finance Minister, Ishaque Dar, two weeks after taking the oath back in 2013, raised the GST from 16% to 17%, making an impact of almost 8% raise in the taxes.
• PML-N’s estimated budget deficit in 2017 was 4.1% which went up to 6.6% towards the end of the fiscal year, hitting the national exchequer by the massive blow worth Rs. 1000 Billion.
• So, now the incumbent Government not only has to discharge $9 Billion for debt repayment but also has to get rid of circular debt, worth $18 Billion. 9 plus 18 equals 27. So, $27 Billion dollar package it is. Shabash!
• Artificially maintaining rupee while issuing $1200 Billion “excessive” notes is how the previous Government chose to exhibit their skills in the art they are known to have mastered.
• The havoc that was wreaked for exporters by the previous Government was triggered by an incredible increase in the import cost & ceasing the refunds to artificially control the exchange rate. Politics is a witch – no?
• The current account deficit back in 2013 was $2 Billion – which none of us looked kindly to – but boyyy, this year from May to July, we kept having $2 Billion current account deficit EVERY month. Beat that!

In order to run the economic wheel smoothly, Pakistan needs $12 Billion. For that, the most intelligent way to go about was to REFRAIN from putting all the eggs in ONE basket.

*How PTI has brought about the much-needed Economic Overhaul*

• First of all, I would like to appreciate the Finance Minister, Asad Umar, for NOT raising the oil and gas prices at such a pace as recommended by the regulatory authority and for being empathetic enough to have REDUCED the importance duty from 30% to 10%.
• OGRA & NEPRA had sent in their recommendations for a price hike in gas & electricity prices even before PTI came into power. PTI could have chosen to raise the prices for both of the basic commodities EQUALLY for everyone but I’m glad they chose to categorize the total population into three brackets – the affluent – the middle-class salaried chunk – the poor, shifting the majority of the burden on the first bracket and reducing it for the rest.
• For the first time ever in the history of Pakistan, we are seeing a Government bringing in basic structural changes in the economic system while appreciating the due authority of State Bank of Pakistan – for there are certain key Fiscal decisions that are for the Central Bank to make and not Federal Finance Ministry.
• Again, for the first time ever in the history of this country, we have a Government that has the spine to face the masses while explaining the whole economic situation and its intricacies to them like they were NEVER told before. It feels like we are all making our key economic decisions ‘together’ while everyone possesses the right to ask the feasibility status of the policies formulated and decisions made.
• In order to run the economic wheel smoothly, Pakistan needs $12 Billion. For that, the most intelligent way to go about was to REFRAIN from putting all the eggs in ONE basket.
• Last week, Pakistan received $6 Billion lifelines extended by Saudi Arabian Government WITHOUT any strings attached to the deal – KSA to place $3 Billion with SBP to support Balance of Payment along with $3 Billion Deferred Payment Facility in the Oil Import.
• China, Malaysia, and UAE are also going to play a pivotal role in helping Pakistan jump out of the severe economic crunch that the previous Governments collectively threw it in and now pretending as if PTI has been in power since forever.
• Contrary to the population belief that got instilled in the Pakistanis over the past few decades that rulers bag foreign loans in the name of the country but end up stashing it all in their families’ bank accounts. The most recent example is the infamous Panama case – which landed the Former Prime Minister of Pakistan – Mr. Nawaz Sharif back home – now people have this hope that their money is going to be spent on them. The recent onset of Austerity Drive is reflective of how the national exchequer is being taken care of in all honesty.
• The revival of public trust is being accompanied by the clarity of understanding in the once-not-so-politically aware nation that;

Read more: Pakistan’s geostrategic environment and its impact on the economy

“The CHALLENGES that the INCUMBENT Government is dealing with are the CONSEQUENCES of the PREVIOUS Government’s ECONOMIC decisions” &

“This Government’s economic vision & competence will be reflected in the STATE they LEAVE the economy in for the NEXT Government”

*Why should the investors trust the Incumbent Government?*

Though there is a long list of reasons that I can pen down here to shed light on why and how I think our friendly neighbours and investors should trust the PTI-led incumbent Government with their investments but stating down a few;

Actions speak LOUDER than words. PTI Government has decided to extend the low-cost gas provision to FIVE zero-rated export sectors, while BEARING $44 Billion hefty cost, merely to improve exports.

• The legislative measures that have been taken in the first two months to recover the properties stashed abroad though money laundering are being put in place for the first time in Pakistan. 10,000 such properties have been identified and are being avidly probed – which fosters my belief in a system inculcating transparency.
• As per their manifesto, they have promised to provide 10 Million jobs & 5 Million Houses – about which the Finance Minister confidently filled the IMF Director, Christine Lagarde – while expressing his desire for the upcoming 19th IMF programme to be Pakistan’s LAST financial support seeking program. That’s quite a promising sentiment.
• Actions speak LOUDER than words. PTI Government has decided to extend the low-cost gas provision to FIVE zero-rated export sectors, while BEARING $44 Billion hefty cost, merely to improve exports.

Following are the sectors that are going to reap the benefit of this amazing incentive.

– Leather

– Sports

– Textile

– Surgical goods

– Carpets

• According to a recent estimate, Pakistan has $10,000 Billion laundered to other countries EVERY year. The Government is already cracking down on the currency smugglers and money launderers.

Read more: Pakistan on its way to becoming a cashless economy

Even if the Government succeeds in getting 50% of the money laundering activity curbed and exports increased by $5 Billion to $10 Billion, the economy will begin to stand upon its own pretty feet INDEPENDENTLY, without any staddle to seek refuge from, Insha’Allah. Pakistan Zindabad!

Maleeha Hashmey is a corporate trainer, motivational speaker, socio-political enthusiast and human resource development consultant by profession. She has been working with the telecommunication sector as a corporate trainer. She has been working with the Ministry of Education, Khyber Pakhtunkhwa, as a Human Resource Development Consultant & Teacher Trainer. Her dream is to make Pakistan a stronger economic state that the whole world views as a force to reckon with. She can be followed on Twitter via her Twitter handle @MaleehaHashmey. The views expressed in this article are author’s own and do not necessarily reflect the editorial policy of Global Village Space.