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Thursday, May 23, 2024

Talal vs Iqbal – who is right on Pakistan’s economy?

News Analysis |

Talal Chaudhary on Friday lamented the deteriorating situation of the economy and professed that worsening position of the economy is due to the disqualification of the disgraced ex-PM Nawaz Sharif.

His statement brought him in direct confrontation with the widely publicized economic view of the Interior Minister Ahsan Iqbal. Later that day, Interior Minister, Ahsan Iqbal speaking with many private channels argued that Pakistan’s economy is stable and doing very well. He even took to Twitter to express his displeasure on statements by Army chief and DG ISPR, on the economy, where he stated:

“Government has turned around the Pakistan’s economy in the last four years through the policies of economic reform and infrastructural development.”

read more: Pakistan’s economy: Growing or declining?

He sparked further controversy on the conversation on Dunya TV channel, where he stated that “every institution should comment in their domain. It should not publically give such irresponsible views for which the country has to pay the price”.

He further commentated that DG ISPR should not be giving commentary on the economy. However, later commentating on a private channel, he argued that I never commented on the Army Chief statement.

Today, again, he continued his rhetoric on the economy and through series of messages on Twitter and very determinately put forward the rosy picture of the Pakistani economy.

Ahsan Iqbal claimed that Pakistan had witnessed the highest growth rate of in a decade of nearly 6% this year. Secondly, he claimed that the Pakistani economy is experiencing the lowest inflation and highest investment rates. And finally, in his last tweet, he claimed that tax to revenues which dropped to less than 9% of GDP in 2013 from 13.5% in 1999 -when the previous time PML-N government was forced to go home.

read more: Pakistan’s economy at a tipping point

Government confusion over the real state of the economy?

It is fascinating because, on one side, one of the ministers of the government is reinforcing the breakdown of the economy story, but other is dismissing the claim by outwardly claiming it to be in perfect situation. Interestingly, neither of the ministers are in the finance department.  It shows the weak position of the government that how it has failed to build consensus between its ranks. Besides, it also indicates that some of its cabinet members and parliamentarians believe that all is not right with the economic situation.

It could also be the tactics to divert the attention from affairs of the accountability court, where Nawaz is expected to get a grilling. Moreover, today’s tweets reflect that Ahsan Iqbal wants to continue this controversy to give Nawaz story a bit of a breather after Fridays condemnable and shambolic scenes.

A brief look at the few economic indicators reflects the sorry situation of the economy. It was also pointed out by the Army Chief Qamar Zaman Bajawa as he showed concern about the deteriorating condition of the economy as debt continued its upward trajectory.

Apparently, he must have been briefed with the figures published by the State bank of Pakistan, the ministry of finance or international institutions such as IMF or world bank.

read more: South Asian Giants are hungrier than Botswana,Iraq and North Korea…

What do the stats show?

The recent figures published by the State Bank of Pakistan indicate that Pakistan’s economy faces immense challenges.  Independent economists and observers were already highlighting the warning signs and issues related to external debt, current account and trade deficit were discussed openly in electronic media and print media.

Currency depreciation needed

Ahsan Iqbal is right that inflation is tamed. But, he never bothered to explain the real story behind this. Because it was the craftiness of Ishaq Dar who kept the currency artificially high. He never let the currency to depreciate naturally despite the repeated warnings from IMF and world bank. Now, it is predicted by some analysts that when it plunges suddenly, it can convert into full-blown crises. IMF predicts a 20 percent devaluation is needed.

The interior minister failed to muster up the courage to show the appalling figures of current account and fiscal balance, and Gross Public debt as the percent of GDP in his tweets.

Debt to GDP

The current balance has deteriorated to -4% in FY17 from -1.3 in FY13.  The government had targeted the fiscal balance to settle at -3.8% but, it also plunged to staggering -5.8%. Finally, if we talk about the debt which sparked the controversy, the target for the year was 61.4% of the GDP, but it worryingly declined to 67.2% of the GDP. Pakistani law has set the limit of 60 percent of the debt-to-GDP ratio which we have now crossed. However, if we compare it with other developing and even many developed countries, it is much lower than theirs.

Nevertheless, debt has swollen up, while debt to GDP ratio is a correct way to look at the debt figure. In isolation, it depicts a half story which induces a wrong conclusion about the state of the economy.

Also, the target of 6% remains a target too far for Pakistan in current circumstances, and rather than cooking up the figures, Ahsan Iqbal should bring forward the complete picture.

He only showed the figures which were positive and hid the actual data which are proving instrumental in bringing the economy to its knees.

Read more: “Darism”: Pakistan’s new moral code?

Foreign Reserves under strain

Why cannot he confess that after depletion of reserves, Pakistan is on the verge of taking a new loan? Despite, coming out of IMF program and promising vocally to break the begging bowl, what is forcing Pakistan to beg for loans again?

It is an economic crisis and lack of funds which can even make Pakistan bankrupt in a matter of few months, in case if the credit line is denied. So, the economy is in fragile state & confessing it won’t make Ahsan Iqbal less a leader.

Moreover, Ahsan Iqbal should stop the blame game and rather than advising Army to refrain from commenting on the economy must look into damaging comments of his own party leaders which confessed the deteriorating health of a domestic economy.

Disillusioned people of this country feel content in their homes as nothing has happened. Unaware of the scale of the crises inflicted by ‘Dollar Man,’ public continues to sleep, and finally, media has started to make ripples. What can potentially wake them up? Maybe: devaluation in the rupee, looming inflation and resulting surge in indirect taxes.

In the end, the way Talal Chaudary did, those in slumber will blame the ousting of Nawaz for all the ills and brunt of failed policies. Economies do not deteriorate in months but happen due to policies not implemented over many months.