ISLAMABAD - The 'performance' of the incumbent government on economic front in nearly five-year of its tenure is nothing but blunders, sheer follies, ill-conceived policies based on short-sightedness, mismanagement, corruption, nepotism, favoritism and many more.
The present government led by Pakistan People's Party (PPP), broke all the records of getting foreign and local loans in the history of Pakistan, failed to control depreciation of rupee against the US dollar, bridge the soaring budget deficit, eliminate corruption in public sector entities and above all overcome the power crisis in the country.
The beleaguered government has several times changed its economic team to overcome the financial challenges in last four and half years, as it replaced four governors of State Bank of Pakistan, four finance ministers, four finance secretaries, and five heads of the Federal Board of Revenue. The level of turnover in the government's economic team only reflects the inconsistency and confusion with which they have handled the economy. But economic situation remained worse during the period under review.
Prices of essential
food items
Despite tall claims of the government that inflation rate went down, the prices of basic essential food items went up in 2012 as compared to the prices of 2008. Price of one of the basic food item wheat flour (atta) increased to Rs 35 per kg in 2012 from Rs 18 per kg in 2008. Rate of Basmati rice (broken) witnessed an upward surge to Rs 80 in 2012 from Rs 37 in 2008. Price of moong pulse (washed) surged to Rs 135 per kg in 2012 from Rs 53 per kg. Mash pulse price (washed) soared to Rs 160 per kg in 2012 from Rs 70 per kg in 2008. Similarly, sugar price increased to Rs 60 per kg in 2012 from Rs 28 per kg in 2008. Mutton price touch the mark of Rs 570 per kg in 2012 from Rs 240 per kg in 2008. Meanwhile, beef price surged to Rs 280 per kg in 2012 from Rs 130 per kg in 2008. In the same way, prices of vegetables and fruits also increased in the period under review.
Public debt
Pakistan's total public debt was doubled in last four and half years mainly due to low revenue collection and sharp decline in rupee value against the US dollar. Pakistan's public debt has touched a record level of Rs 12 trillion in 2012-13, including Rs 7.6 trillion domestic debt and Rs 5.025 trillion foreign debt, which was only around Rs 5.5 trillion when the incumbent government took the charge in 2008.
Rupee depreciation against US dollar
Pakistani rupee sharply depreciated against the US dollar by over 61 per cent in four and half years tenure of the incumbent government. Pakistani rupee remained under severe pressure against the US dollar in the period under review, as it hit a record low level of 97 in December 2012 against the level of 60 in 2008.
Power sector subsidy and losses
The government also failed to reduce the long hours power outages despite provision of huge subsidy of around Rs 1.3 trillion in last four and half years mainly due to the inefficiency and mismanagement in the power sector. Power subsidy could not improve the electricity situation in the country and the crisis is posing a serious threat to the budget deficit target and economic stability in the wake of massive subsidies. The government at present is providing Rs 25 billion (on average) subsidy to the power sector. Loadshedding is causing 2 per cent GDP loss per annum while the impact on revenue generation is around 52 billion rupees.
On the other hand, he government was unable to make any progress to recover power sector dues worth Rs 480 billion from different institutes including federal, provincial, autonomous bodies and private departments that has worsened the power crisis of the country.
Budget deficit
Country's budget deficit remained high in last four and half years mainly due to low revenue collection and lavish expenditure of the government. The government never met the revised target of budget deficit in period under review. Federal Board of Revenue (FBR) in last four years failed to achieve the revenue collection targets set by the government leading to increase the budget deficit of the country. The deficit recorded at Rs 680.41 billion (5.2 per cent of the GDP) during the fiscal year 2008-09 and at Rs 929 billion (6.3 per cent of the GDP) during financial year 2009-10. The budget deficit recorded at 6.6 per cent of the GDP in fiscal year 2010-11 and at Rs 1,389 billion during the last financial year 2011-2012.
Foreign exchange
reserves
Country's foreign exchange reserves remained under severe pressure in 2012 as it were in 2008 when the government took charge and approached IMF on that time for standby loan programme. The country's foreign exchange reserves are on the depleting side due to heavy repayment to IMF since February 2012. The government may approach to IMF in next few months, as it feared that reserves might come down to less than $ 10 billion by June 2013 from existing $14 billion.
Public sector entities
The country's public sector enterprises - such as, Pakistan International Airlines, Pakistan Steel Mills and Pakistan Railways - are ailing due to mismanagement and blatant inefficiencies in last five years and so. The government has reportedly violated the rules in hiring the staff/officials in public sector entities and more than required staff was recruited in PSEs leading to huge financial losses.
Pakistan Steel Mills
The profitable public sector entity - Pakistan Steel Mills - in 2008 is now facing losses worth Rs 71 billion in 2012. The PSM faced financial loss of Rs 25.52 billion during the first fiscal year of the incumbent government i.e. 2008-2009, Rs 11.56 billion in 2009-2010, Rs 12.43 billion in 2010-2011 and Rs 21.43 billion in 2011-2012.
Pakistan International Airlines
Financial the PIA is in a sad state of affairs as total borrowing touched Rs157.165 billion till November 30, 2012 against Rs 42.5 billion in 2008 when the government took charge. Hundreds of unnecessary recruitments were made in PIA on political basis that could be gauged by the fact that there were 600 pilots for 26 aeroplanes - 23 pilots for one plane. Similarly, it was confirmed that PIA’s per aircraft human strength is 482 people whereas in a private airline there are only 125 people staff per aircraft.
Pakistan Railways
Pakistan Railways suffered a loss of Rs 40 billion during the last four years since the incumbent government took charge in 2008. Total losses of Pakistan Railways were around Rs 17 billion when the government came into power in 2008.
Exports and remittances
Country's exports and remittances, however, have shown healthy growth during the last four and half years. Country's exports have increased to $ 24 billion in 2012 from $ 18 billion in 2008. Similarly, country's remittances have increased to $ 13 billion in 2012. Remittances of $47 billion were recorded in last five years.