The three years of state governance by PML-N were not an easy period. PTI, after remaining dormant for six months in the parliament, opted to put up a tough and meaningful resistance to the incumbent government. The countrywide protests and dharna at Islamabad against alleged rigging by PML-N in May 2013 election nearly paralysed the government.
The process of alignment of power-sharing between the political government and the establishment was also not an easy one. With some trade-offs between the two it got settled down.
But, just as things started to move in government's way, surfaced the revelation made by the Panama Papers. The government will consume much of its time, in its fourth year of governance, on this account as the opposition appears persistent to take up the issue to its conclusion. Falling economy, energy shortages, alarming internal and external security of the state, bad governance and institutionalised corruption were some of the ills inherited by the PML-N government when it took control of state in May 2013.
Finance Minister Ishaq Dar launched last Thursday the 'Economic Survey 2015-16':
Some of the highlights are: GDP stands at 4.7 percent against a target of 5.5 percent, industry recorded a growth of 6.8 percent against a target of 6.4 percent, services 5.7 percent against a target of 5.7 percent, large-scale manufacturing (LSM) 4.6 percent against a target of 6.4 percent and an agriculture growth of -0.19 percent against a target of 3.9 percent.
The main driver of the economy was the service sector, notably, the construction industry which grew by 13.1 percent and the LSM, notably, the automobile industry which registered a growth of 23.4 percent, followed by fertiliser (15.9 percent), leather products (12.1 percent), rubber (11.7 percent), cement (10 percent) and pharma (7.1 percent). The negative driver of the economy was the agriculture production which remained negative. The inflation was recorded at 2.8 percent and the fiscal deficit at 3.4 percent.
The government claims that a significant improvement in economy is on account of structural reforms and fiscal discipline it has introduced upon taking over, but fails to make transparent the details of the same nor has presented to the nation its strategy how it intends to arrest declining agriculture growth and falling exports. It is also required to come up with a roadmap in relation to foreign direct investment.
While all of this achievement is an improvement over the past, but not good enough to move the country out of economic crises. Much has to be done to turn around the economy in real terms.
With a population growth of nearly 3 percent and rising unemployment, the country needs a GDP growth of around 7 percent, failing which, more of the population will slide down to poverty level which is the current trend.
As per the biannual 'Business Confidence Index survey' sponsored by Overseas Investors Chamber of Commerce and Industry (OICCI) - an association that represents 196 multinationals operating in Pakistan, the economic outlook in Pakistan is at a six-year high and the business confidence in the country has improved to a positive 36 percent in the period from October 2015 to March 2016 while the confidence level of foreign companies operating in the country is recorded at a positive 55 percent which is the highest in the last 6 years. The reasons cited for the improvement in business confidence are a relatively better political stability, improved security situation, low inflation on account of record low oil prices and 42-year low interest rates. The global country perception has also improved.
But in spite of these positive indicators the foreign direct investment (FDI) continues to be sluggish. During 2015-16 (10 months) FDI inflows could only reach $1.7 billion whereas in the same period outflows were registered at $747 million. Most of the funding in relation to the China Pakistan Economic Corridor (CPEC) largely constitutes project financing loans and some investments as Chinese equity in energy projects. Not only has the government failed to mobilise FDI in real terms, it has also failed to address the genuine concerns of foreign investors like availability of level-playing ground, transparency and good governance in the conduct of the government functionaries and other issues.
Country's exports dropped by 13 percent as total exports dipped to $15.6 billion in the first nine months of this outgoing fiscal year from $17.9 billion a year ago - a drop of $2.3 billion.
The global markets where Pakistan's products once reigned supreme have been largely taken over by products from India and Bangladesh. Agriculture and industry continue to remain neglected on account of present government priority more in favour of infrastructure and energy projects. Apart from securing loans from IMF and under CPEC the government has also secured around $2 billion short-term loans in the last three years. Much of the revenue will be diverted to loan repayments at the expense of development, health, education and defence needs.
The heatwave in Pakistan, this summer, has put to test the claims of the government to end load-shedding. Although the government in its Economic Survey 2015-16 claims that power generation has maintained its growth trend from last year, increasing by 12.2 percent, the ground reality is that the demand of electricity has peaked to 22,000MW while the available power on the grid is 15,523MW, resulting in a shortfall of 6500MW. On the national grid the duration of load-shedding in urban areas is 12 to 14 hours while in rural areas the duration is from 16 to 18 hours. The issue is not the increase in power generation capacity, which the government is aimlessly pursuing, but the real issue is the extent of its availability to the consumer, which is a complex issue. Not only has the government failed to make the issues transparent, it is also lacking competence to manage it.
Corruption continues to dent the economy and social fabric of society. The incumbent government has done little in its three years to arrest institutionalised corruption. The real economic, social and political transformation will come when the government will let the regulators function freely as per the dictates of the constitution where regulators like NAB, FBR, State Bank of Pakistan, National Bank of Pakistan, Nepra, Ogra and other autonomous public sector entities are allowed to function freely in the best national interest. Today all these organisations are subservient to the dictates of the political leadership and hence their output is meaningless. Someone needs to work harder to restore the sanctity of our institutions.
(The writer is former President of Overseas Investors Chamber of Commerce and Industry)