Huzaima Bukhari, Dr. Ikramul Haq & Abdul Rauf Shakoori
We should have a State in which we could live and breathe as free men and which we could develop according to our own lights and culture and where principles of Islamic social justice could find free play—Quaid-e-Azam Muhammad Ali Jinnah’s words, made the guiding principles by Pakistan Tehreek-e-Insaf in its 2018 Manifesto.
In its manifesto, Pakistan Tehreek-e-Insaf (PTI) made commitments to introduce reforms and transform governance through accountability to the core of government, empowering people at the grass root level through local government, depoliticizing and strengthening police, reforming the criminal justice system, and providing speedy access to justice. They also submitted their commitment to bringing reforms in civil services, institutionalize e-Governance, delivery through legislative reforms, ensuring freedom of the press. Chapter IV of the manifesto explains the road to inclusive economic growth by introducing reforms in Federal Board of Revenue (FBR), creation of 10 million jobs, implementing policy framework to build five million housing units, making Pakistan business friendly and facilitating rapid growth of the Small and medium Enterprises (SMEs), transformation of key economic institutions, fixing energy challenges and ensuring that China Pakistan Economic Corridor (CPEC) translate into a game-changer. Apart from these tall claims, the PTI also undertook in the manifesto providing easy access to finance for citizens and industry, boosting tourism, building of knowledge economy by utilizing Information Technology.
In democratic dispensation, party’s manifestos plays a pivotal role to convey its future course of action if it succeeds in forming government. Despite all allegations of foul play, abuse of religious card, special favours and waivers by superior court, alleged backing by establishment and other doubts about fairness of Elections 2018, PTI formed the federal government and was supposed to implement its manifesto as promised with the nation. However, even after three years in power, it appears that they are maintaining parallel document in complete digression to the original manifesto, presented to the public to secure their votes. PTI’s first agenda was to transform the governance and ensure accountability. However, by looking at their past 38 months’ performance, Pakistan is experiencing the worst form of governance. Each institution is facing credibility issues, regulatory reforms are person-specific, federal and provincial governments along with the connected institutions lack coordination, administrative burden has risen, person-specific enforcement of laws is introduced—all these meant to fix political opponents. The PTI coalition government has failed to introduce performance review mechanism for ensuring check and balance on the cabinet members as well as public sector institutions. Similarly, the Chairman of PTI and incumbent Prime Minster, once a strong supporter of accountability making it his election slogan, after assuming power, is accused of selective accountability. It has not only tarnished the image of the government but has damaged the integrity of law enforcement agencies including the judicial system.
Legal maxims “he who comes into equity must come with clean hands” and “accused is a favorite child of the law” are among the basic guiding principles of accountability but now the Prime Minster himself is facing allegations of financial corruption—for his assets no satisfactory answer for acquisition is available according to his political opponents.
In Hanif Abbasi vs. Imran Ahmed Niazi case, the controversial decision by Justice (R) Saqib Nisar rescued him despite his backtracking from initial declarations multiple times regarding setting up Niazi Services, legal fees and income earned through playing county cricket. His submissions included a dubious letter of remittances detail from his close friend Rashid Ali Khan, which contradicted facts contained in previously submitted income tax returns. However, the apex court accepted his explanations. Similarly, in the case of Aleema Khan, despite having unexplained wealth, secured bail-out in violation of law and Constitution of Islamic Republic of Pakistan. Now, some members of federal cabinet are facing corruption allegations. Pakistan has witnessed increase in corruption under the present Government. Resultantly, the mantra of corruption is losing its effectiveness and contrary to government’s claims, Pakistan in 2020 slipped seven positions downwards on corruption perception index as compared to its position in 2018.
The cabinet members are also named in various scandals. The famous Sugar Crisis caused unprecedented price increase as exporters of sugar gained benefit in two ways: first they were able to get subsidy and secondly allowed to make profit from the rising sugar prices in the local market (increased from Rs.55 per kg in December 2018 to above Rs.100 per kg in 2021). This has created extreme hardships for the common man but filled up the pockets of those holding key positions in the government. Despite Report of the Sugar Inquiry Committee wherein the role of various ministers has been questioned recommending action against them, yet no progress is made and the nation is still paying cut-throat price of mismanagement and alleged corruption.
The PTI coalition government has another “feather in the cap” for wheat scandal. Despite knowing that carry-forward stocks, before the procurement season, would be critically low (by far the lowest during the preceding five years), the Ministry kept telling the Economic Coordination Committee of the Cabinet (ECC) in May and June 2019 that Pakistan Agricultural Storage & Services Corporation Ltd (PASSCO) had met its procurement targets. The Federal Ministry failed to monitor and report to ECC the erratic procurement practices in the provinces. Subsequently, the unprecedented decision of the Government to allow sale of subsidized wheat for the poultry sector was taken at the policy level. The entire process was completed within a span of only three days, from submission of application by the Poultry Association to the Minister of National Food Security & Research (MNFS&R) on 19 November 2018, summary moved by the Secretary MNFS&R on 20 November 2018 and the ECC’s decision allowed 0.2 million tons on 22 November 2018.
This has been a saga of failures at the policy and planning levels where massive embezzlement in public procurement was further compounded due to inept handling by the provincial food departments, and collusive malpractices of their officials and private stockists. Planned shortage of wheat has harshly affected the common man while on the other hand has enriched the poultry business owners by giving them subsidized wheat and later raising the prices of poultry products. The nation is suffering on account of maladministration but no one is taken to task.
The government further tested the patience of citizens by shamelessly approving price hike in the case of hundreds of local and imported medicines ranging between, 262% to 400% as reported in the media with the name of a PTI minister in circulation but no action was taken against him. Rather, he was awarded with a powerful party position. Similarly, no reforms were introduced to bring changes in health sector. Even earlier initiatives introduced by the previous government were reversed such as free supply of medicines to cancer patients and restricting benefits to dialysis patients etc. Moreover, when Covid 19 was at its peak, the government was facing corruption allegation for in handling of patients. So the slogan of transforming governance remained just an election slogan, and accountability was directed against political opponents. The Government has abused National Accountability Bureau for political motives—finally through undesirable legislative instrument amendments have been made in the National Accountability Ordinance, 1999 to save its own skin.
The Government has also failed miserably on economic front. Tall claims are proved wrong, as the economic team could not deliver amidst multilateral challenges, both at micro and macro levels. The common man’s suffering has multiplied and now he is unable to meet ends. The government is also going through turmoil finding it difficult to fix monetary and economic challenges that has painted a bleak picture and no meaningful relief is foreseen in the near future. Fiscal tightening and rising inflation on account of highest utility prices, rationalization of taxes, so-called measures to reduce the primary balance, and exchange rate adjustments, along with higher commodity prices, are severely impacting the poor.
The government’s incompetence and lack of control over various issues has severely wedged the administrative model of the country. The rupee has broken its record low against the USD to cross the cap of 170—reached record level of 176. Devaluation is a constant factor and has been on a downhill slide since the very first day of this government. Local currency paper has lost more than 50% of its value during this tenure and has translated into higher cost of production, higher utility prices and higher unemployment.
Unfortunately, the people at the helm of affairs in the central bank seem clueless, casual and naive in their response towards this challenge. The recent “optimism” shown by Governor State Bank of Pakistan (SBP) about falling rupee left all economic experts in a state of shock. This kind of approach and argument coming from Governor of SBP is not even expected from high school economics student.
Rising fuel prices are further ignited with devaluing currency which creates a domino inflationary effect, making things unmanageable for the government as well. Though the government is trying to compensate by reducing levy and taxes, however, increasing global fuel prices and decreasing rupee parity has failed to embank the flood of inflation. It is pertinent to mention that during 2020, PTI government charged as high as 120% on account of levy and taxes meaning thereby that the benefit of reduced prices in global market never actually reached the ordinary citizens.
The policy rate dropped to a historic low of 5.75% between 2015-2018. This positively reflected in higher GDP growth. Post the political turmoil in Pakistan since January 2018, the policy rate massively increased by 7.5% and reached to 13.25%. Simultaneously, billions of dollars of foreign debt were raised at astonishing high rates. With such hot money flowing in, the pressure of debt servicing increased leaving less fiscal space for public development projects. The same was gradually reduced when COVID-19 surfaced and lockdown was announced, but until then damage was done, adversely affecting economic growth.
The claim to raise GDP has also proved bogus. GDP decreased by 0.4% in 2019-2020 which was the first time after 1952 that Pakistan witnessed negative GDP growth, meaning thereby that such things never happened even during wars or natural catastrophes. This alone speaks volumes about gross incompetence of the government. The projected GDP of the latest year FY2021 is 3.94% appears like a jugglery of numbers, as it does not match projections of institutions like International Monetary Fund (IMF) and the World Bank for the same financial year which ranges between 1.3% and 1.5% respectively. Claims made by government are always subject to doubt as per their track record. They projected GDP growth for the financial year 2018-2019 as around 3.3% which was later assessed and declared as 1.9%. The main factor in decline in our GDP is frequent rise in energy prices, which adversely affects cost of doing business. Tariffs record annual increase of 11.72 % under PTI government’s two and a half years in office as compared with 5.18 % increase under the PML-N government’s entire tenure.
No doubt the government is in dire need of funds, as it failed to generate it organically. Claim of reforms in FBR could not materialize. Frequent changes of its key functionaries badly impacted its performance as it could not meet its previous two years’ targets and relying on debts has finally brought us at the position where we have crossed the cap of 100% of GDP. Bailouts from friends instead of investment will serve no useful purpose, as it will further increase debt and debt servicing.
Pakistan is currently figuring out how to secure extended loan facility from IMF. However, the outcome of latest review under the 39-month IMF-Extended Fund Facility (IMF-EFF) is still shrouded in mystery. The IMF’s nod will be with stringent conditions of further devaluation, more taxes and rising inflation. It seems that government has failed to satisfy the lender over commitments made earlier. The international lender is asking for key reforms like increased revenue, tax rate harmonization, withdrawal of subsidies, offloading loss-making Public Sector Enterprises, reduction of power sector arrears, reforms in electricity subsidy and multiple other factors. Al these demands will add an additional burden on both individuals as well as corporate sector and the dream of creating an environment to promote trade would not become a reality due to the high cost of doing business in Pakistan.
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.