Promises and ground realities

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  •  PTI’s dilemma

By the time the 2018 elections arrived it was clear to anyone who could access ww.sbp.org.pk/ that the country’s forex reserves were fast shrinking  to below the danger point. Intelligent newspaper readers were aware  that the country was badly indebted.  There were editorial  comments and columns in newspapers like ours  criticising  the  finance minister’s  policy of keeping the rupee overvalued. The economists who were critical of the PMLN’s policies were writing articles on government’s failure to urgently selloff the major loss making  public sector enterprises. Others castigated its  failure to broaden the tax net for fear of annoying powerful lobbies.

The  PTI however boasted  of a team of highly knowledgeable economic experts who had  avowedly prepared policies to turn the economy around despite all these problems. The party  promised everyone a pie the sky like 10 million jobs for the unemployed and five million housing units for the poor. Two months before the elections the party announced  a slew of pledges that included Fata’s expeditious merger with KP, bifurcation of Punjab province,  a development package for Karachi and a programme for alleviation of poverty besides a number of steps for improvement of the economy. All these projects require mega bucks.

The Federal Finance Secretary told the NFC moot on Wednesday that  in the current  fiscal year the government would pay  Rs3.6 trillion on account of  debt servicing and defence spending that is equal to 68.2pc of the current fiscal year’s revised budget. The two expenditures however  are equal to 121pc of the net federal revenues. The finance ministry has to borrow to pay salaries, pensions, run hospitals, schools and build roads. Every penny that the centre spends on development is borrowed either from the banks or foreign sources.

The cabinet has now  vowed to increase the defence budget.  The only way it  can satisfy  both the voters and the army is by raising taxes in a big way,  drastically improving  exports  and selling   off major loss making public enterprises. Alternately  it will have to go  begging for more loans. In any case it  is going to be  a tight rope walk. Wining the elections was easy, governing the country  is much more difficult.