Approaching stagflation
A report by a UN Commission puts Pakistan’s GDP growth at 4.2 per cent in 2019 and 4 per cent in 2020 compared to Bangladesh’s 7.3 pc, India’s 7.5 per cent, and the Maldives’ and Nepal’s 6.5 per cent each in 2019.
The inflation rate is high, economic growth has slowed down, and unemployment is steadily on the rise. A dilemma for economic policy makers, since actions intended to lower inflation may exacerbate unemployment, and vice versa. The PTI has brought us to stagflation
The pre-election claims of PTI experts having conducted thorough studies of the country’s economic problems and thrashed out solutions have turned out to be a part of an elaborate hoax. The leadership was simply clueless about the most important economic issues. It had only slogans and it relied on empty promises to come to power
The government’s administrative expenses have increased despite the country’s precarious financial condition. To reach the corridors of power, Imran Khan, whose main claim to fame was “honesty”, collected around him some of the most unscrupulous turncoats. A number of them had to be accommodated in the cabinet swelling its size to at least 39 ministers and minster-equivalent members in a few months. More are on the waiting list. This has raised the administrative expenses. The federal government had to give a legal cover last month to Rs 39 billion in supplementary grants due to excess in expenditures by different ministries and divisions. Fearing rebellion in the PTI’s Punjab MPAs if they were not granted development funds, the Punjab government has promised to allocate Rs100 million to each of its MPAs.
It was maintained before elections that people were unwilling to pay taxes to a corrupt government. With Imran Khan in power, every citizen with taxable income will voluntarily pay the dues. This simplistic approach led to FBR falling Rs 318 billion short of its tax target.
The economy continues to experience a severe balance of payment crisis of around $1billion every month. This has already squandered the $4 billion credit from the UAE and Saudi Arabia. By the time a deal with IMF is reached, the $2 billion Chinese loan would also have been consumed. Imran Khan is reportedly fed up with his economic team. But he has no option.