Pakistan at a crossroads

Huzaima Bukhari, Dr. Ikramul Haq & Abdul Rauf Shakoori

The continuous failures and inability of the incumbent coalition government of Pakistan Tehreek-i-Insaf (PTI) to handle governance-related challenges have provided an opportunity to the opposition parties to make a last ditch effort to oust the Prime Minister by submitting a joint motion of no-confidence under Article 95 of the Constitution of Islamic Republic of Pakistan [“the Constitution”]. The motion is signed by around 100 lawmakers of the opposition parties. After the controversial elections of 2018, the PTI emerged victorious and Imran Khan assumed office as 22nd Prime Minister of Pakistan. At that time, many questions were raised on the fairness of elections, certain players acting behind the scene came under discussion and some named in media as khalayee makhlooq [alien forces] playing a pivotal role helping PTI to capture power. Political loyalties of many electables changed and some were even sent to jail or disqualified for life.

Under the former Chief Justice of Pakistan, Mian Saqib Nisar, the Judiciary was criticized by legal experts due to its shoddy interpretation to favour Imran Khan in a petition filed by Hanif Abbasi for non-disclosure of assets and an offshore company. The Supreme Court accepted Imran Khan’s money trail without verification of the dubious letter presented by Rashid Ali Khan which contradicted income tax declarations. The honorable bench also entertained his stance on legal fees, availing income tax amnesty, income earned through playing country cricket, and Niazi Services despite backtracking from contradictory initial declarations on various occasions.

Apart from all of this, after assuming powers Imran Khan announced his first 100-day agenda which was more on nation-building rather than cutting ribbons of new development projects. He committed to transforming the governance system, revitalizing economy, and ensuring national security of the country. His other commitments included measures like conversion of Prime Minster and Governor Houses into universities and community public places, bringing back laundered money to Pakistan, reforming the Federal Board of Revenue, creating ten million jobs, strengthening the labour market through building five million houses, fixing energy challenges, and transforming China Pakistan Economic Corridor (CPEC) into a game-changer.

The situation on ground has been entirely different, e.g., on the economic front, rather than focusing on its agenda of economic growth and revamping the taxation framework, the government found an easy solution of collecting revenue through short-term approach of levying harsh indirect taxes.

Immediately after assuming power, the then finance minister presented the first mini-budget of the PTI government imposing new taxes of over Rs. 700 billion. Tax relief already available to the salaried class was revoked and tax rates enhanced from 15% to 20% on people falling in the highest income slabs. Customs duty was raised on more than 5,000 items whereas regulatory duty was raised on around 900 import items. The government substantially slashed development budget. Instead of promoting much-needed growth, all these measures adversely affected Pakistan’s GDP that dropped from 6.1% in fiscal year 2017-18 to 3.12% in 2018-19 and further worsened to -1% in 2019-20.

The indecisiveness of the government to go to International Monetary Fund (IMF) forced Pakistan to obtain hot money at exuberantly high rates. This negligence badly impacted the economy already left in very bad shape by the two previous regimes. The debt balloon has been continuously inflating and its volume has ultimately reached the size of GDP. The recent data issued by the State Bank of Pakistan show that the total debt and liabilities have surpassed Rs. 51.724 billion—it was Rs. 29,879 billion in 2018. External debt has increased to US$ 130.6 billion. The Pak rupee is on a constant down-slide and is touching a new low every day. The current interbank rate is R s.178—showing the rupee has lost more than 50% of its worth since this PTI government assumed power. This has massively increased costs of input of businesses adding fuel to the fire of inflation.

Since PTI assumed power the ratio of inflation has gained momentum, getting beyond the government’s control. According to the recent release of Pakistan Bureau of Statistics (PBS), the Consumer Price Index (CPI) has reached an alarming level of 13% which is higher than the previous tenure of Pakistan Muslim League Nawaz (PMLN).  Under the PMLN regime the average rate of inflation from 2013-to 2018 was around 5%. Moreover, the recent official figures show that the current account deficit has increased sharply this year due to phenomenal rise in imports. The data relating to imports released by PBS reveal that imports rose to US$52.50 billion during July-February 2022, as compared to $33.85 billion during the same period last year. The balance of trade deficit is of US$31.95 billion. The circular debt is growing constantly and has doubled since this government took charge. Higher transmission & dispatch losses of electricity distribution companies (DISCOs), lower recovery of billed amount, and non-payment of subsidies are among the major causes of circular debt accumulation. The circular debt as of 30-06-2021 stood at around Rs. 2.3 trillion! However, the PTI government despite tall claims in their manifesto failed to overcome this issue.

The main election promise of the PTI government was anti-corruption drive. However, like many other promises and claims, this also proved to be a misguided projectile landing nowhere near its objectives. The key ministers of Imran Khan’s cabinet were named in corruption scandals. The Election Commission’s scrutiny committee alleged that even the PTI’s head was engaged in fund embezzlement belonging to the party.

Pakistan witnessed the worst shortage of sugar and wheat. Their prices went up to historic high rates. In terms of transparency ranking, the people of Pakistan witnessed a decline with every passing year of the PTI government. As per Transparency International’s flagship publication ‘Corruption Perception Index’, Pakistan’s ranking during the PTI government dwindled from 117/180 to 140/180. This does not only contradict the government’s claims but also indices the government as the most corrupt so far. In the last three and a half years, various corruption scandals kept on emerging involving cabinet members and even the Premier—notable examples include the sugar crisis, wheat shortage, medicine scandals, ring road, BRT, and Tosha Khana scandal.

The government’s inability to respond to various international disclosure of undisclosed wealth stashed offshore by rich and powerful also exposed its seriousness of anti-corruption rhetoric. This also unveiled the resolve of State institutions for across the board accountability, transparency and importance of paying taxes. The elites were maintaining their assets offshore in an alleged attempt to avoid taxes. The Swiss Secrets, Pandora Leaks, and earlier Panama leaks exposed the names of hundreds of politicians, businessmen, media tycoons, bureaucrats, and army personnel from Pakistan. The list ranges from powerful military personnel like former ISI Chief, General Akhtar Abdul Rehman, ex-Corps Commander, General Shafaat Ullah Shah, former DG ISI–CI, Major-General Nusrat Naeem, Ex-Air Chief, Abbas Khattak, the incumbent Federal Finance Minister Shaukat Tareen and political turncoats like Moonis Elahi, Khusro Bakhtiar etc.

Also, on the national security front, the PTI Government was allegedly mishandling the matter of Indian spy, Kulbhushan Jadhav and specifically enacting the “International Court of Justice (Review and Re-consideration) Bill, 2020”. This law was crafted to aid an Indian spy who was involved in the killing of innocent people in Pakistan. The law minister misguided the parliament regarding the International Court of Justice’s (ICJ) decision by saying that the law is being passed in the direction of the court.  However, Pakistani lawyers advanced argument in the court and maintained that appropriate remedy, in this case, would have been, at most, effective review and reconsideration of the conviction. Pakistan must have told ICJ that Pakistan’s domestic legal system provided for an established and defined process whereby the civil courts could undertake a substantive review for the decision of military tribunals to ensure procedural fairness afforded to the accused. It should have been emphasised that Pakistan’s courts were well suited to carrying out a review reconsidering any possible violation of Article 36 of the Vienna Convention.

The counsel for Pakistan should have assured ICJ that the process of judicial review was available and High Courts of Pakistan always exercised “effective review and jurisdiction”. The example of Peshawar High Court was apt to be highlighted where the court pointed out that respect for the principles of a fair trial was of cardinal importance in any review and consideration.

While deciding the case ICJ made Pakistan responsible for the provision of effective review and reconsideration, however, the choice of means was left to Pakistan. But while passing the new law to favour Indian spy, all the government members queued up in line to vote. None objected to the undermining of the existing course available to Kulbhushan including invoking the jurisdiction of High Courts as explained by the counsel for Pakistan in ICJ.

All these facts show that the present government could not deliver as per its promises despite enjoying the full support of all institutions. It got enough time to set the direction of the country, however, its focus remained to strengthen its power base by utilizing the various institutions, and resultantly, the county was pushed to economic meltdown and foreign policy-related challenges.

The country needs a bold and competent leadership that can address all the above challenges.  The opposition parties are confident that the ouster of Premier and fresh fair elections can solve the country’s main problems. They claim that they have numbers to remove the current government. However, they have failed to share their strategy to overcome important challenges such as dealing with IMF. The PTI government has already deviated from the terms of agreement with IMF which might impact the release of remaining installments. Though the present government claims the highest tax collection in history, yet figures show reliance on heavy indirect taxation. If the opposition succeeds, it will have no option but to impose new taxes. If so, it would increase inflation.

The opposition parties should also brief the nation regarding repayment of loans rescheduled due to covid. Moreover, Pakistan is struggling to address Financial Action Task Force (FATF) since 2018. The outstanding FATF’s demands are the same that former prime minster raised with security agencies and later faced Dawn leaks. While effectiveness is rated very poor on all levels including regulatory compliance, the role of law enforcement agencies in implementation is highly dissatisfactory. Opposition parties need to share their roadmap of addressing all challenges related to the economy, foreign policy, and FATF so that the nation should know the way forward to rid Pakistan of the mess which has piled up in the last few years. People of Pakistan are not interested in seeing the same faces time and again rather, they are looking for a positive impact on their lives which on one hand improves their living standards and on the other secures the future of their children.

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Huzaima Bukhari & Dr. Ikramul Haq, lawyers and partners of Huzaima, Ikram & Ijaz, are Adjunct Faculty at Lahore University of Management Sciences (LUMS), members Advisory Board and Visiting Senior Fellows of Pakistan Institute of Development Economics (PIDE). Abdul Rauf Shakoori is a corporate lawyer based in the USA and an expert in ‘White Collar Crimes and Sanctions Compliance’. They have recently coauthored a book, Pakistan Tackling FATF: Challenges and Solutions