Criticising the government's economic policies, Imran Khan said that Rs 170 billion are being spent on Orange Line train in Lahore and additional multi billions on roads, ignoring the plight of the poor patients who are forced to die because of lack of the health facilities. Khan said that an estimated 25 million children are unable to go to school because of lack of resources and it was the responsibility of the government to provide them such resources.
PTI chairman said that during past two years the PML-N government kept increasing the prices of the petroleum products, gas as well as increasing the rate of indirect taxes, but did not give any relief to the masses. Asad Umar while speaking on the economic performance of the government from 2013 to present said that Pakistan's exports have declined to lowest level since 2010, Foreign Direct Investment (FDI) has declined to lowest in 12 years, debt burden has increased to alarming levels and tax policy remains a joke.
He added that unemployment, energy shortfall is worsening and the government has yet to initiate any serious reforms to improve governance and reduce theft and losses of the power sector. Under the "most experienced" PM Sharif government, the economy is in a tailspin and instead of moving forward, we are moving behind.
He said that the facts showed a rapid decline in investment and exports - the key drivers of every economy. Sharp increase in cost of doing business, rampant corruption and predatory taxes on masses are hurting the economy and leading to a sharply increasing unemployment which has crossed 5 million mark especially during past two years.
New investments into the economy remains stagnant at only 15 percent of GDP - halfway through the PML-N government - the lowest recorded for any government in our history. Investment has shockingly declined with private sector spending declining to 9.7 percent in FY15, even lower than 9.8 percent recorded in the last year of the PPP led government.
FDI has virtually collapsed, recording a 50 percent decline in FY15. Despite investments from China coming for the CPEC projects, the overall FDI fell to just US 851 million dollars in FY15 - the lowest recorded in the last 12 years. Situation is getting critical and instead of serious reforms the government continues to make matters worse through predatory taxes, rampant corruption and mini-budgets.
The farmers of Pakistan have been caught between decline in prices of their end product, increasing input costs and stagnant yields and in the case of cotton sharply reduced output. As a result the agriculture economy of Pakistan has suffered badly and the small farmer has borne the brunt of this deterioration. He said that according to the World Bank, the cost of doing business has increased sharply in the first 2 years of the PML-N government with Pakistan's ranking slipping to 128 (out of 189 countries) in 2015. Similarly, the World Economic Forum 2015 report showed that rampant corruption, worsening energy crisis and high cost of paying taxes is eroding the competitiveness of the industry in Pakistan, he added.
Asad said that the government policies are also hurting local industry. Pakistani industrialists are not in a position to compete in international market. Due to high costs, exports have slumped sharply by 11 percent in the first four months of FY16, the sharpest pace of decline in over a decade. Exports have registered a decline in 21 out of 30 months.
Since coming into power, the PML-N government has unleashed unprecedented predatory indirect taxes on people which include higher GST, regulatory duties and withholding taxes on all essential goods & services. Despite the PML-N promise in the 2013 election manifesto to not to raise tax rates, the first thing the government did after winning elections was to hike GST rate to 17 percent. Now the tax rate on diesel has been raised to 51 percent - all without approval from parliament.
He said that the government failed in broadening tax base as a result it shifted the entire burden of taxes on people through indirect taxes. In FY15 indirect taxes (inclusive of WHT) stood at 9.7 percent of GDP (88pc of total tax collection). Compare this to 8.4 percent of GDP in FY13. On the other hand, direct taxes (excluding WHT) continue to decline and government refuses to tax the powerful elite and reform FBR, he added.
Asad said that another major election promise of Nawaz Sharif was to break the begging bowl. "We have seen the government accumulate record debts at record high prices. The first thing the PML-N government did after coming into power was to sign up with IMF. Since then the government has added over Rs 4.7 trillion in public debt in just 28 months in power sector. As a result every Pakistani citizen is now under a debt burden of Rs 112,000 (as of September 2015) compared to Rs 85,000 in May 2013", he maintained.
Not only has PM Sharif government added record new debt, it has done so at record high prices. The $500 million Eurobonds proudly launched by PM Sharif in September 2015 are priced at 8.25pc), making them the most expensive borrowing done by any country in the world in 2015. In comparison Egypt raised $1.5 billion at 5.9pc, Sri Lanka raised $650 million at 6.1 percent.
The $500 million Eurobonds priced at 8.25 percent are also the most expensive debt ever raised by any Pakistani government in history. The Eurobonds issued by government in 2007 was issued at spread of just 2 percent above US Treasury. In comparison the Sharif government has issued Eurobonds with spread of 6.1 percent over US Treasury. The citizens will repay this debt through higher taxes on essential commodities.
He said that Nawaz government also promised with the masses to resolve energy crisis but the power and gas shortfall have both increased to alarming levels at the mid-term of the third Sharif government. The government has totally failed to reduce the power shortfall (load-shedding) in the country. According to NEPRA report, the power shortfall increased to 4,743MWs in 2015 from 4,227MWs in 2013, Asad Umar said.
Similarly, he said that gas shortfall has reached alarming levels of over 2BCFD in 2015, from 1.6BCFD shortfall in 2013. Despite a record increase in gas prices and import of the highly controversial LNG, the government has been unable to address the rising gas shortfall, with negative fallout on industry and consumers. Big question marks remains over the non-transparent manner in which the LNG supply agreement has been reached without open bidding and in complete disregard of PPRA rules.
Bad governance has been the hallmark of the Sharif government and the energy sector has suffered the most. The showcase projects that have been initiated by PM Sharif have either been abandoned as they were unfeasible (ie Gaddani power park,) or have seen costs escalate by over 300 percent. The Neelum Jhelum project (for which all power consumers pay through surcharge) has seen cost escalate by 341 percent to Rs 444 billion in 2015 (from 130bn in 2011). Similarly, Nandipur project has seen costs escalate by 300 percent to Rs 65 billion in 2015 (from 22bn in 2011) and is producing the most expensive electricity in Pakistan.