Not long ago, international credit agencies and financial watchdogs were predicting steady Pakistani economic development. The previous government (Pakistan Muslim League-Nawaz) successfully overcame a surge in terrorism and an electricity shortage. Prime minister Nawaz Sharif, by initiating infrastructure projects and bringing in the China-Pakistan Economic Corridor, paved the way for the nation’s economic revival.
Then, just as Sharif was gaining support across the political spectrum, the military establishment ousted him. As Sharif was knocked out of the competition by a controversial judicial verdict, Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) gained power in the center and in the provinces of Punjab and Khyber Pakhtunkhwa (KPK).
It has been almost eight months since PTI came to power, and during this period the country’s economy has started crumbling, with inflation now at 9.41% and the rupee at a historic low against the US dollar. From petroleum products to food items, and from utility bills for electricity and gas to medicine, everything is subject to price increases because of the growing inflation rate, while the government is unable to attract any international investment and has failed miserably in creating business opportunities within the country.
The rhetoric and the false promises made by the establishment-backed PTI are gradually reaching a dead end as it is the time to show actual performance on the governance and economic fronts. During the last five years, PTI has relied on attacking its political opponents and messing with the minds of a section of the masses who actually were victims of the establishment’s propaganda or not capable of understanding the dynamics of politics in Pakistan. They fell into the trap of those who were controlling the power chessboard.
But now the establishment’s hegemony on state affairs is not under threat as Sharif is out of power and the weak and obedient Prime Minister Imran Khan and his cabinet are sitting in the center. This should actually make things easier for the establishment, as it can rule the country with the impression that there is a democratic government at work. However, the problem remains that the PTI government has no plan for extracting the country from this turmoil. The International Monetary Fund predicts that the inflation rate will hit 14% by the end of this year, while economics experts expect unemployment to surge to 7.5-8%, and 4 million more people are expected to fall below the poverty line by the end of this fiscal year.
So what went wrong?
The question arises that if Sharif was able to keep the economy on the right track, why all of a sudden did the economy after his departure start becoming crippled? For many common people, the PML-N government was artificially maintaining the economy by borrowing heavily from international institutions. This is what PTI and the establishment have been propagating.
However, the reality is quite the opposite. It is not possible to maintain even a single house for a long period of time on loans, and to maintain an entire country’s economy certainly is not possible through artificial measures. What Sharif did was to initiate mega-projects for infrastructure development and electricity production. This brought international investment into the country and also kept the construction industry moving at a fast pace. Then the PML-N government not only computerized the governance system but also helped the information-technology sector grow more rapidly by allowing the cellular network companies to introduce fourth-generation (4G) mobile services.
Sharif knew how to tackle the bureaucracy and get things done in a timely manner
Sharif knew how to tackle the bureaucracy and get things done in a timely manner, so by taking these steps, he was able to win the confidence of the international investors and financial institutions. Then his friendly ties with India and his decision to distance Pakistan from the Arab world’s proxy wars earned him respect in the region, and trade with India improved a great deal.
The other propaganda that was spread by PTI and the establishment was it is because of the PML-N government’s heavy borrowing that the country’s economy now is in shambles. But let’s check the facts.
In a September 2018 question-and-answer session, PTI Finance Minister Asad Umar told the Senate that the PML-N borrowed a total of $70 billion during its five-year tenure and paid back $49 billion. But if the PML-N was maintaining the economy artificially by only borrowing, then the question arises of how on earth it was able to pay back $49 billion. It is not possible for a government to repay such a huge amount without generating economic activity and growth.
In contrast, the current PTI-led government had borrowed (as of February) $2.3 billion. The soft loans from Saudi Arabia and China are not included in this whopping debt that PTI has taken on during the first six months of its rule. Even more alarming, despite borrowing so heavily, the PTI government has not initiated any new mega-projects.)
The real problem
According to Muhammad Ziauddin, one of Pakistan’s most senior journalists, the problem does not lie with Pakistan’s elected governments. Rather, he wrote last month, Pakistan has been in a state of war for the last 40 years. From fighting a US proxy war against the Soviets in 1979 to supporting the Taliban in the 1990s to the “war against terror,” and then eliminating terrorists from its own soil after the Army Public School massacre, Pakistan has been continuously in a state of war, and with limited resources of its own and spending heavily on the war, no elected or civilian government could turn it around.
He is right in his assumption, as most of the country’s budget is spent on defense. Sharif tried to turn the tables, and his finance minister, Ishaq Dar, gradually started raising concerns over the allocation of state resources to the defense establishment. As a result, Sharif is behind bars and Dar is in self-exile to avoid the wrath of the establishment.
Since it is easy to blame elected leaders for all the ills of the country instead of pointing fingers at the actual problem, which is the establishment’s hegemony over state resources, many analysts and journalists prefer to stay silent, or deliberately misguide the masses by only pointing fingers at the elected leadership.
Unless the defense-based narrative is changed and the nation’s resources allocated to the health, education and human-development sectors, nothing will change, and the country will always remain dependent on foreign aid. Though Army Chief General Qamar Javed Bajwa, in a recent meeting of corps commanders, stated that Pakistan was gradually focusing on socio-economic development, it still remains to be seen whether the establishment is truly willing to shift its focus from the defense-based narrative to the socio-economic narrative.