Imran should save wickets and push the run rate up

Pakistan's prime minister needs to urgently build extra fiscal space and make the economy work.



By Shahab Jafry

Published: Sun 25 Aug 2019, 8:00 PM

Last updated: Sun 25 Aug 2019, 10:43 PM

Surely Pakistan's Prime Minister Imran  Khan would have liked a 'few more runs on the board' to celebrate his government's first year in office. The situation now must remind him of one of those Test matches where the team lost far too many wickets and scored far too few runs by the end of the first day's play. Not the perfect start, then, to put it mildly, but the game is still wide open.
Going forward, instinctively, he'll look to save wickets and push the run rate up a bit. That means controlling his remarkable propensity for political gaffes and, somehow, getting the economy going.
At the moment, his accountability drive and the International Monetary Fund (IMF) programme are holding the innings. Fulfilling a core campaign promise has brought some public support and the Fund is keeping things from collapsing for now. But that, at best, is like sustaining one lunch-to-tea session in a five-day match.
'Looters and plunderers in jail' has sold well enough so far. But so many arrests all year and so few convictions are now beginning to raise a few eyebrows; with a shrewd opposition cleverly stoking the 'selective accountability' fire. Also, weren't we told for 20 years that the Pakistan Tehreek-e-Insaf (PTI) would hang all the corrupt rulers upside down and shake laundered "billions (dollars)" out of them?
Well they're shaking them alright, but people have yet to see even the first cents of those "billions." What they have seen all this time, though, is life becoming increasingly unaffordable for the common man. And relying on the IMF programme alone to win this match is more likely to leave the government with even more questions to answer by the time it completes its second year.
As much as the bailout is a godsend it also, ironically, straightjackets the economy. You could gulp high inflation, drop-dead growth, even steeply rising unemployment provided you're sure of a turnaround that will give you an 'I told you so' card at the next election.
Sadly, there's little chance of such improvement; at least during this electoral cycle. This $6 billion life-saver goes straight to debt-servicing and pushes default that much further down the road. What can it do, really, to an economy that will need to repay $30-40 billion in the next few years? Sure, the programme will unlock about just as much in other IFI (international financial institutions) lending, but guess where that too will go? Yes, same thing, to pay back more debt; only to be repaid with interest later of course.
It won't, in short, do anything to stimulate manufacturing, production, employment, trade, revenue and eventually relief. And - yet more irony - so far as the fund's facility is in place there's practically no chance any of that can happen.
That's because it locks the economy into a very contractionary fiscal and monetary stance. Everything under the sky is taxed to the hilt, government spending is frozen, interest rate is being raised repeatedly and the currency has collapsed close to 30 per cent over the last year.
Some figures, recently released by the central bank, are shocking. Officially, core inflation is presently hovering around 11 per cent and likely to end the year at 13 per cent. But when measured by the weekly SPI (sensitive price index), which counts mostly food items, it shot up from 14 per cent in June to almost 20 per cent around mid-August. No wonder nobody went shopping this Eid, it was hard enough putting food on the table in Naya (new) Pakistan.
The high interest rate and tax environment has already begun shrinking private sector credit offtake, which is the life and blood of a growing economy. Industrial production, too, is crashing, with nine out of 15 industry groups reportedly registering negative growth. You can imagine the impact on employment, trade, Balance of Payments, and all that as the vicious circle deepens.
With the IMF bailout making sure no big wickets will fall immediately, the skipper needs to urgently build extra fiscal space so his star batsmen can score much needed runs and take the innings into the next day.
Khan's premiership has so far been very harsh for everybody; from corrupt politicians to hard-working, honest people. And while nobody doubts that he inherited a moth-eaten economy, it is now his responsibility. He fought for it and now he's responsible for it.
Also, let's not forget that he didn't exactly snowball to power. He rides a razor-thin majority - made up largely of political opportunists and compulsive turncoats - which is why the opposition has been able to paralyse the House.
That only raises the urgency of making the economy work. Perhaps a good start would be taking his foot off the throat of the working class, revise some taxes, and resume some incentives. That's sure to score a few runs for everyone.
Shahab Jafry is a senior journalist based in Lahore


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