First Year – Crusade Against Corruption
Muhammad Ziauddin analyses PTI’s performance during the first year in government on the three major fronts – Economy, Accountability and Politics.
All through the first year of their rule Prime Minister Imran Khan and his Party, metaphorically speaking, had refused to come down from the container they had occupied during their marathon sit-in when they were in opposition. That they were in the government not in opposition had to be dinned into them by the media on daily basis exhorting them at the same time to behave like a responsible government dedicated to bettering the lot of the nation.
And shockingly, in the very first few months it was revealed that the ruling PTI had no one, not even a small little team on its roll that could be called the economic brain of the Party. This is even more startling because its very mandate was for resetting the economy after having eliminated corruption.
The bargain with the Army that the PTI government seemed to have made is to be seen on one page for the purposes of optics only, in reality the latter seems to have conceded to the former all political powers to rule except perhaps for the Ehsas programme in return for its crutches for the next five years.
The newly formed National Development Council (NDC), a non-constitutional body which has given a seat to the Army Chief is expected to come up with a panacea for all our economic ills, acceptable to both the civil and military authorities.
The government perhaps believes that the best option for it under the obtaining circumstances is to give up the economic part of governance as well to the Army which also controls the security and foreign policies, especially the aspects which impact our relations with India, Afghanistan, China and the US.
The specific purpose of the NDC appears to be setting up of one single window for processing all decisions, including the relevant security issues pertaining to China-Pakistan Economic Corridor (CPEC), issues related to establishing trade and economic links with the Central Asian Countries via Afghanistan as well as negotiating peaceful settlement of all issues with our Eastern neighbor and to establish mutually beneficial trade and economic relations with India.
And during the year, using the Army crutches the government has succeeded in effectively silencing the independent mdia. Today the media suffers from an unprecedented level of imposed “self-censorship” through tactics unbecoming of a responsible state. Those who refuse to fall in line suffer loss of readership and viewership. Unjustified cover-ups and the suppression of truth regarding crucial questions of public accountability have seriously affected the perception of the quality of democracy in Pakistan.
Normally, a new government takes more than a year to settle down and get a handle on things. More so, if the new government is being led by an ‘outsider’ like Imran Khan, notwithstanding his five-year stint at running Khyber Pakhtunkhwa, a relatively smaller than two of the four provinces in terms of population and economy.
But if the Prime Minister’s own self-image is that of a crusader, fighting corruption in high places, his government’s performance cannot but be dominated during the year overwhelmingly by nabbing and grabbing, more than anything else. And that is exactly what the PM and his government has been doing the best part of the past year.
Even during one of the few high points of his first year in office when he was invited to the White House by President Trump and promised without his asking to mediate between India and Pakistan the PM did not let go his crusade.
While addressing a large crowd at a community event at Washington’s Capital One Arena he went after opposition leaders and threatened to ‘take away’ their prison facilities. “They will stay there as long as they do not return the money they have looted,” Imran had thundered to a charged audience.
Indeed, since the day he assumed the office of Pakistan’s chief executive, Prime Minister Imran Khan has been making it increasingly clear that he does not wish to work with the parliamentary Opposition, that he does not wish to recognize it as such and that he does not wish to accord it with the dignity of being a government-in-waiting. That so far he has not been seen shaking hands with any of the main opposition leaders in the House is indicative of his deepest personal and political aversion for these leaders.
With his utterances and actions since the National Assembly elected him as the leader of the House, the PM has been conveying the impression rather strongly that in his opinion those sitting on the left side of the isle in the House are a bunch of thieves and dacoits who had, he believes, plundered the country white during the last ten years. He appears to believe even more strongly that this group of plunderers has no right to be sitting in the elected houses and that all of them deserve to be imprisoned for good and the keys thrown away.
That is perhaps why he was loath to let the leader of the Opposition, Shehbaz Sharif become the Chairman of the Public Accounts Committee of the National Assembly, or see under trial elected members attending the NA sessions on Speaker’s production orders.
Though he and most other members of his government would insist that they had nothing to do with the arrests of various opposition leaders by the NAB or any other official investigation agency including the anti-narcotics force, their faces, nevertheless, would invariably betray a broad hint of self-satisfaction over every one of such arrests.
And the PM’s repeated insistence, almost on daily basis that he would not let the ‘thieves’ go unpunished and that he would not give an ‘NRO’ to these elements come what may, nevertheless, makes it abundantly clear that the PTI government would leave no stone unturned to get the Opposition leadership ousted from the country’s politics for good.
The Prime Minister appears convinced that by continuing to conduct media trial of these ‘corrupt to the core’ politicians and denying them at the same time even a modicum of legitimate relief would soften them enough and in due course of time, to start coughing up, taking advantage of the plea-bargain window, the billions that they had siphoned off, in his opinion, from the treasury. So far what has come in is not even a trickle.
He also appears convinced that the unclaimed benami bank accounts would yield billions. Here one would like to caution the PM that it would be a totally uninitiated banker who would hand over the amount in the benami accounts in his bank to the government. Bankers know all the tricks and more on how to make such accounts disappear for the benefit of their loyal clients and at times for their own benefit. And as for the benami assets are concerned it would serve as a God sent bribery bonanza for the FBR field staff.
Since it had very little time on its hands to do anything else other than pursue its corruption crusade, with any degree of equanimity except borrow from Saudi Arabia ($3b), UAE ($2b), Qatar ($3b) and China ($2b) to take care of a large part of the yawning current account deficit amounting to $19b the portfolio of economy was handed over to technocrats having no political affiliation to the ruling party and these technocrats as expected have handed over the portfolio to the IMF.
Therefore, the economy does not seem to have taken even one feeble step towards the launching of the promised state of Riyasat-i-Madina that the PTI had pledged in its election manifesto.
The major economic challenges that the country is facing even after one year of the PTI government is high consumption, low production and low savings and investments. The gap is widening between savings and investments, which has pushed its debt almost impossible to manage pushing in turn the new government to contract in its first year more debt than what the previous two governments had done in the last ten years, just to pay back the past debts.
Our total debt has gone up to nearly Rs 36 trillion expanding by Rs 7 trillion during the outgoing year. External debt has gone up by $10 billion during the year from $95 billion to $105 billion.
And as is usual with IMF programmes the first phase of its so-called reforms which, in our case this time, was front loaded has introduced a highly self-propelling wave of all-round price increases affecting the population across the board but the brunt of it falling on the middle and poorer classes.
The sudden jump in inflationary pressures has caused a substantial increase in discount rate with the interest rate now hovering around 13 per cent. And while exports have not picked up the way it was hoped following a drastic depreciation of the rupee vis-à-vis the dollar, the prices of essential imported inputs like raw materials and intermediaries needed to fabricate exportable surpluses shot through the ceiling resulting in our exports being priced out of the world markets.
And viewed in the context of Fund’s prediction that the economy would slow down in 2019-20 to around 2.4 per cent in the process of achieving the desired macro-economic stability the huge revenue target (Rs 5.5 trillion) fixed in the new budget and which has also been endorsed by the Fund looks too far-fetched and sans any economic logic.
The immediate impact of the Fund’s front-loaded reforms has upset Pakistan’s economic engine so much so that the major economic generators seem to have gone into deep slumber. The back-bone of our economy, the textile sector is in a state of wait-and-watch while our fastest growing sectors, like automobile, banking and construction seem to have slowed down considerably. Meanwhile, unemployment is galloping.
Need To Develop Political Consensus
In order for the government to be able to make the richer classes pay their income tax dues honestly, and introduce the second phase of the Fund related reforms which starts from September this year the government needs to bring in some highly essential legislations (State Bank Act, Nepra Act and the State-Owned Enterprise Act as part of the IMF programme). But to get them passed by Parliament the ruling coalition has only about a margin of 12 votes in the National Assembly and far too negative a margin in the Senate.
This state of affairs demands the government to develop political consensus in the country which in essence means that the government open direct dialogue with the main opposition and reach the desired consensus on the basis of political give-and-take. This, in the government’s current state of political mind-set, however, appears rather impossible.
Additionally, cooperation of the provinces has also to be obtained to generate the kinds of surpluses the government is relying on to meet its fiscal deficit target for the current fiscal year. This appears rather impossible with its loathing of the Sindh government under the PPP.
Failure to make these legislative amendments and enlist cooperation of provinces will mean the government will have to seek waivers as the programme reviews get under way. The first review is due in December. In case the Fund refuses to give the waivers, the programme would itself come to an end unleashing a new wave of economic uncertainties for the country.
On the other hand, failure to get out of the FATF ‘grey list’ could have implications for private capital inflows in the ongoing fiscal year. For the current fiscal year, which ends July 2020, the Fund has projected an external financing requirement of $25.62 billion and it has identified available financing totaling $27.6bn. Of this amount, $7.2bn is projected to come from private creditors, ones who would be sensitive to Pakistan’s continued placement in the grey list.