Imran Khan’s first hundred days in office have been beset by economic failure and U-turns. Babar Ayaz reports on a government that appears stronger on promises than policies
It seems that the Pakistan Tehreek-e-Insaf was never really prepared totake the reins of power in Pakistan. It believed that, although it mightemerge as a majority party, it would not win the required numbers to form a government.
This calculation was not wide of the mark. The PTI had to compromise on its principles andgarner the support of parties it formerly loathed, yet even with this compromise, it could only cobble together a razor-thin majority to get Imran Khan elected as prime minister. The ruling coalition includes the Muttahida Qaumi Movement-Pakistan, an ethnic party from Karachi, and the Pakistan Muslim League-Quaid.
The new government set a target of 100 days to roll out its programme. Public perception that it would use this period to highlight some of its planned achievements turned out to be a misperception. The party, it appears, simply wanted time to work out what to do, as it had no clue about the issues facing the country.
To be charitable to Imran, perhaps he is well-meaning. But, as I said a few years ago, he is politically naive and doesnot understand the complexities of statecraft. He fails to grasp that running Pakistan is not the same as managing Shaukat Khanum Hospital and Research Centre. This is evident from the speeches he made to the nation after being sworn in. He and his finance minister, Asad Umar, made tall claims that they would not borrow from the IMF, but within weeks they realised that the country would have to borrow, not only from the IMF but from whatever other sources are available to keep the wheels of the economy turning.
While Khan can lay the blame on the Nawaz Sharif and Zardari governments for bringing Pakistan to the economic brink, some responsibility must be shared by him and the forces that backed him to destabilise the Nawaz government from the very beginning.
After the PTI’s first major show of strength at the 2011 Minar-e-Pakistan rally in Lahore, I commented in a Pakistani English daily op-ed piece that it was confusing that Imran Khan-led change would be from ‘what to what’. After so many years, when he was finally ‘selected’ – to borrow Bilawal Bhutto’s phrase – Imran Khan needed 100 days to figure out the way forward, rather than immediately implementing his proposed reforms.
Consequently, the people’s expectations over the ‘100 days’ hype fell flat, as it soon became clear that the party had misread Pakistan’s serious economic challenges by focusing on a single obsession – corruption. Indeed, corruption is an issue, but suggesting itcouldbring back US$11 billion of Pakistani money stashed abroad is obviously justgovernment rhetoric. The process, involving the signing of Mutual Legal Assistance treaties (MLA) with 26 countries and ratifying them by Parliament, would take a long time. And even when the MLAs were signed, Pakistan would have to prove in the respective countries’ courts that the ill-gotten funds had been laundered by Pakistani politicians and businessmen.
Also, the countries which host these assets would have to admit that they had provided a haven for illegitimate income. This would not only apply to Pakistanis because much larger amounts have been invested by the nationals of other countries. For instance, the UAE and UK have billions of dollars invested in real estate by nationals from all around the world. What is more, in many cases, these assets could actually be legal and may have been transferred through legitimate means.
Although one cannot dispute Imran’s good intentions inhisplanned efforts to returnmoney to the country, how successful he will be in this endeavour during his tenureis doubtful, and onecannot pin much hope on this source of revenue to pull the country out of its present economic predicament.
The naivety of Imran Khan and, surprisingly, of his economic adviser, Asad Umar, is evident from the fact that, while it was written on the wall that the yawning current account gap could not be bridged without the IMF’s help, they vehemently declared – before they were in power – that they would not go to the IMF because of the tough conditions attached.They had not even considered that the interim finance minister, Shamshad Akhtar, an astute economist whounderstood the country’s needs, had prepared the ground for the next governmentwith the IMF. But oncethey took office and reality hit them, they made a major U-turn.
It was ironic that, after all his talk of taking steps to alleviate poverty, by the close of the day after Imran Khan’s ‘100 days’ speech, the dollar value shot up to Rs138 from around Rs133, after touching Rs 144 in the midday session – thus showing a Rs5 fall in a single day. The State Bank corrected the interbank rates, perhaps due to the strong market reaction and opposition to the Rs10 depreciation in a single session to bring it down to Rs 138.
Since the PTI took over, the rupee has been in freefall of around 12 per cent,as of December 5 this year,whereas the value stood at Rs 123.25 when the PTI was sworn in during mid-August. This will have a major impact on all imports of oil and other essential items. Already inflation has risen during the last few months, from less than 5.8 per cent in August to 6.8 percent in October – although this is the rise in the consumer price index, which is much lower than the sensitive price index that affects people on a daily basis.
Another inflationary step taken by the government is the increase in inter-bank borrowing rates, which have been raisedby 2 per cent in the short time the PTI government has been in office. This will directly affect Pakistan’s GDP growth rate, which some analysts now estimate may fall to less than 4 per cent by the end of this fiscal year. This is in sharp contrast to earlier projections that GDP would grow to over 5.8 per cent. A country’s GDP growth rate is usually considered the magic figure with which all economic indicators are linked, including the rise and fall of per capita income and revenue projections. Higher interest rates always slow down the economy and result in a contraction.
The PTI admitted in its progress report that it could only achieve 18 of the 34 deliverables it set for itself in the first 100 days – and even this success only concerns putting some systems in place, such as the Naya Pakistan Housing Authority, which is a duplication of the existing Pakistan Housing Authority.
Each successive government has tried to persuade the banks to give mortgage facilities to people and at times, the State Bank even made it mandatory to offer a certain percentage of loans to the housing sector. However, the banks have either shied away from that or the mortgage rate is so high that the common man cannot afford it.
Instead of experimenting with new economic models to increase housing in the country, the government should look at models already internationally acknowledged as successful, such as Khuda Ki Basti in Karachiand the vertical housing scheme adopted by the Municipal Corporation of Greater Mumbai in partnership with the private sector, to give decent houses to people living in slums on encroached lands.
The recent anti-encroachment drive all over the country may free some land of encroachers but it is also closing down small businesses. The drive should have been started after offering alternative business venues and giving adequate notice.
As for all the other proposals the prime minister talked about with such excitement, they were not new either. Many previous governments have put forward similar poverty alleviation schemes by subsidising the livestock and poultry sector.
On the issue of U-turns by the PTI – the frequency of which show that its leaders are just demagogues without any far sight or vision – I think the media hype has been made possible largely because so many channels these days have footage of what the leaders have said while in opposition, which contrasts sharply with what they are doing now. The only benefit of this campaign is that it may make politicians in opposition more responsible in their criticisms of the government.
Now the PTI leaders are defending their position by saying that Allama Iqbal and Mr Jinnah also made U-turns. But those too were due to lack of vision and an inability to fathom that countries set up by exploiting religion will ultimately be consumed by extremist religious forces.