ISLAMABAD - The economic policies of former finance minister Ishaq Dar have resulted in weakening of the macroeconomic situation, including a widening of external and fiscal imbalances and decline in foreign exchange reserves.
The economic wizard of PML-N government, Ishaq Dar failed to bring reforms in the central bank, power sector, public sector entities, Federal Board of Revenue (FBR) and reducing the cost of business, revealed eminent economists and financial wizards of main opposition parties. They said that Dar had himself handled all the economic ministries and divisions and never considered the recommendations of the fellow ministers and civil servants. They also accused former finance minister of data manipulation to present the rosy picture of the economy. Similarly, they warned that new government would approach International Monetary Fund (IMF) for bailout package after the general elections.
The experts said that economic situation has reached at point where PML-N government took the charge in June 2013. They said, “The budget deficit would reach over 6 percent of the GDP during current fiscal year. Circular debt has already surged to Rs500 billion, current account deficit is expected to widen to $15.7 billion (4.8 percent of GDP) during current fiscal year and reserves held by central bank have reduced to $12 billion. However, the government would take the GDP growth to 5.6 percent, higher in last one decade. Similarly, the tax collection of FBR would reach Rs4 trillion from Rs1.9 trillion of the year 2013 and inflation rate will be restricted at below 4 percent.” They are of the view that government had changed the definitions of foreign borrowing and budget deficit to present these figures at lower side.
“The current economic situation where twin deficits are ballooning, rupee is sharply depreciating, circular debt is increasing and losses of public sector entities are continuously enhancing are due to the economic policies of former finance minister,” said Dr Ashfaq Hasan Khan, the former economic adviser, while talking to The Nation. He accused that Dar had manipulated the economic data to present the rosy picture of economy, as he stopped the tax refunds of the exporters to show healthy growth in tax collection.
Khan informed that former finance minister was against rupee depreciation at the time when all the international financial institutions and independent economists were in favour of rupee devaluation. “Soon after his medical leave, the PML-N government had allowed the rupee depreciation twice in last three to four months, taking a dollar to Rs115 from Rs105,” he maintained. He also said Dar eroded the export competitiveness, which resulted in massive decline in exports during last four and a half years.
Another leading economic expert Dr Qaiser Bengali also blamed the economic policies of the PML-N government made by Ishaq Dar for the current weakening of the macroeconomic situation. “It was the collective policy of the government, which resulted in current economic situation. The incumbent government had focused only on producing electricity from Punjab and it never gave attention to other economic problems,” Bengali told The Nation.
The economic policies of PML-N were to increase tax revenue by increasing taxes on the existing taxpayers and to maintain the foreign exchange reserves by borrowing from external sources. “Borrowing is appropriate when you are making assets of the country. However, the incumbent government had borrowed to increase its reserves,” Bengali said. He further said that government had intervened in the market to stop rupee depreciation when Ishaq Dar held the charge of finance ministry. However, it had not privatized the loss-making public sector entities.
Similarly, the largest opposition party in parliament Pakistan Peoples Party has also said ruling Pakistan Muslim League-Nawaz’s ‘Ishaq Dar economy’ had been exposed. “The PPP is concerned at the total economic mismanagement of the PML-N government characterised by fake and fudged numbers, an exchange rate artificially showing a stronger rupee, artificially build reserves, all of which are now unravelling as former Minister Ishaq Dar is in hiding and hiding also his crimes of omission and commission,” PPP leader Nafisa Shah, who is also member of the National Assembly standing committee on finance and revenue, said in her recent press conference.
Total debt and liabilities in June 2013 were Rs16.338 trillion which increased by Rs10.476 trillion during the last 4.5 years and reached record Rs26.814 trillion in December 2017, she said and added that total external debt in June 2013 was $60.899 billion, which increased by more than $25 billion during last 4.5 years and reached $88.891 billion in December 2017.
Pakistan Tehreek-e-Insaf chairman Imran Khan also recently criticised the economic performance of the incumbent government. The PTI held Nawaz Sharif and Ishaq Dar responsible for the poor economic situation in the country. Pakistan’s exports had declined from 24 billion dollars to 21 billion dollars with a record trade deficit of 33 billion dollars. Circular debt had increased up to Rs500 billion, which was around Rs480 billion in the tenure of previous PPP government.
On the other hand, the government believes that Pakistan’s economy is in good shape. “The GDP growth is expected to grow to a 10-year high of six per cent this year,” said an official of the ministry of finance. He added that government had successfully restricted the inflation rate at below 4 percent during its tenure. The government had doubled the revenue collection from Rs1.9 trillion to Rs4 trillion, which is major achievement, the official remarked.