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  • Jan 30th, 2018
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Prime Minister Shahid Khaqan Abbasi, while addressing the inauguration ceremony of the North Bound carriageway, a component of the long awaited Lyari Expressway project, stated that continuity of development policies of the PML-N government would be ensured as they are aimed at collective benefits of all nationals. Such an inane statement smacks of a mindset that is not only extremely arrogant but, more disturbingly, devoid of the principles of basic economics. First and foremost, a multiparty system, such as is prevalent in this country, reflects a host of different development priorities given the scarce resources of the state. The PML-N has focused on infrastructure development notably in the energy sector as well as in roads and the transport sector. However, in this context, it is relevant to note that the choices made by government ministers during the past four and a half years in the energy sector have been repeatedly challenged by members of the public; and requests for making all deals, particularly the 15-year 15 billion dollar LNG deal signed between Qatargas and Pakistan State Oil transparent, has fallen on deaf ears. Claims that details have been shared with parliamentarians have been denied by members of the opposition and additionally there appears to be lack of transparency in governance in all sectors of the economy. And also of serious concern is the fact that details of project financing under the China Pakistan Economic Corridor remains shrouded in mystery and attempts to seek some clarity on the issue are stonewalled by the relevant ministries. This approach is against the spirit of democracy that this administration claims it is defending.

Secondly, there is never ever any unanimity in terms of development spending between political parties and to assume that the PML-N has a golden formula which would be acceptable to all is simply ludicrous. Imran Khan's Pakistan Tehreek-e-Insaf is focused on social sector development which, according to traditional development economic theory, is more critical than simply focusing on infrastructure development. In other words, a healthy and educated citizenry can go a long way towards ensuring success of infrastructure development projects. Be that as it may, given the massive shortfall between energy supply and demand in 2013 one may have been tempted to support the PML-N government conditionally on energy projects, conditional on the financing arrangements for the projects and purchase agreements between different entities, yet there would have been few takers for the Metrobus in cities where clean drinking water was not available to all.

However, while Abbasi focused on development policies during his inauguration speech yet what has to be highlighted is the fact that the PML-N administration's economic policies are the reason for the current economic impasse. Proclaiming at every opportunity that the economy is in good shape is not even convincing PML-N supporters leave alone the general public. Flawed policies are responsible for a worsening current account deficit four and a half years down the line, an eroding foreign exchange reserve base, and heavier than ever reliance on foreign borrowing, including the 7 billion dollar plus borrowing from the foreign commercial banking sector, that would continue to haunt economic management efforts of subsequent governments. Frittering away the fiscal space that was created during the first two to three years of the incumbent administration through a decline in the international price of oil by trying to focus on budget deficit reduction at the cost of growth and, equally disturbingly, of announcing incentive packages to farm sector, exporters and industry on the one hand and not seeing them through on the other. Tax reforms consisted mainly of raising taxes on existing taxpayers for example the income taxpayers would pay withholding taxes in addition to the tax they pay at source - factors that account for Fitch recently revising Pakistan's rating to negative.

To conclude, Business Recorder would strongly suggest to the Abbasi administration to urgently revisit the economic policies of the Dar era, and while it is a bit late to change development projects with less than 6 months remaining in their tenure yet one would hope that more informed decisions are taken from an economic as opposed to a political perspective. It is unfortunate that the focus remains on politics today and one can only hope that the meaning of democracy undergoes enough of a change in our politics to reflect accountability and transparency in governance rather than simply continuity of one administration for five years.

Copyright Business Recorder, 2018


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