By the time you get an opportunity to read this article the situation would have become much clear as regards naming the next prime minister of Pakistan. Even at this time the most probable name appears to be that of Imran Khan. His agenda has already become somewhat evident from the speech he gave. He also mentioned his priorities but achieving those targets in a specified time may not be as easy as being portrayed by more loyal than the king.
Khan pronounced the following priorities:
- All policies for ordinary citizens
- Safeguard tax revenue
- Decrease government expenses
- Strengthen institutions
- Across-the-board accountability for all
- Increase youth employment
- Help farmers, business community
- Spend money on development
- Repurpose PM House
- Address ties with China, Afghanistan, Iran, US and India
While one has no reasons to doubt his integrity there are a few more urgent issues to be handled with extreme care, the first and the most important issue being restoring the confidence of general public in the prevailing system. In this regard, the perception being created by his opponents that the elections were engineered and rigged has to be removed. Without mincing words it may be said that some irregularities may have taken place in certain constituencies or polling stations, but rejecting the outcome totally is not fair. Therefore, the top priority of Khan should be to establish the faith that the elections were free, fair and transparent. The Election Commission should be instructed to investigate the most talked about constituencies and declare the results null and void in days rather than months.
Pakistan suffered the most during PML-N regime because of the absence of a full time foreign minister and an undisciplined foreign policy. The country needs clear policy for maintaining working relationships with three of its immediate neighbors, Afghanistan, India and Iran. Ironically all these neighbors accuse Pakistan for indulging in cross border terrorism. Pakistan also has about 1200 kilometer long coastal line, which offers easy access to the terrorists through Balochistan, which also pose threat to Gwadar Port and China Pakistan Economic Corridor (CPEC).
Due to the geopolitical importance of Pakistan, world as well as regional super powers wants to get control over Pakistan’s foreign policy. Being a sovereign country Pakistan should not become subservient to global or regional super power. However, at times the country is given no option but to take side of a super power or face doomsday. Pakistan faced this situation after 9/11 and continues to suffer because most of Afghans stringently believe that Pakistan has been fighting the US proxy war. After the commencement of work on CPEC both the US and Russia are getting desperate to get a share in the pie and India has been resisting CPEC passing though Azad Jammu & Kashmir (AJK). Therefore, use of insurgents for sabotaging CPEC can’t be overlooked.
The next government controlling the reign will face two most crucial and uphill tasks: 1) controlling mounting current account deficit and depreciating rupee and 2) commencing negotiations with the lender of last resort, International Monetary Fund (IMF). Both the issues are so badly intertwined that the sooner Pakistan starts negotiations the better it will be. PML-N has left a huge burden of commercial loans by constantly playing the mantra, ‘Pakistan does not need IMF support’. The reality can be judged from two facts that bulk of the foreign exchange reserves are borrowed and have been eroding fast because of rising debt servicing. One completely fails to understand the logic behind increasing interest rate by one percent. Some analysts are of the view that the increase was instigated by Ministry of Finance to please IMF, which completely undermines the autonomous status of State Bank of Pakistan.
To bridge trade deficit, imports will have to be curtailed and exports to be boosted. While boosting exports will be a long drawn process, discouraging import of luxury items i.e. cars, cell phones etc. could be easier. The largest share in import is that of crude oil, POL products and LNG. Import of POL can be curtailed simply by increasing capacity utilization of local refineries. Pakistan has already attained surplus output of certain POL products and extra foreign exchange could be earned by exporting the surplus. LNG could be used for better purposes rather than burning in the power plants.
Pakistan is capable of producing exportable surplus of urea, cement and sugar. In fact these industries have been suffering due to supply glut, mainly because of higher cost of production, particularly high energy cost. In the recent past PML-N provided subsidies on export of various products to earn extra foreign exchange, but never bothered to contain eroding competitiveness of the local producers. Though, exporters of textiles and clothing were offered many incentives, they hardly succeeded in improving quality of products and containing wastages.
Last but not the least, the hype created by PML-N about self-sufficiency in electricity generation remained a hoax call that was evident from prolonged outages and persistent hike in circular debt. Billions of rupees were given to ‘favorite’ IPPs without any audit, which enabled them to make a fortune on taxpayers’ money. Another horrendous mistake was stopping use of furnace oil for power generation and switching over to gas, imported LNG. While PML-N government kept of paying money to power producers, it miserably failed in containing electricity and gas pilferage.
To conclude, it is necessary to reiterate that the first and the most important task of the newly elected government will be to contain the twin deficits and to introduce reforms. Pakistan’s current account deficit (CAD) for FY18 has been reported at US$18billion (5.8% of GDP), up 43% as compared to US$12.6billion for FY17. This was partly financed through reserves, which declined to US$9.8billion at end YF18. Pakistan’s fiscal deficit for FY18 is expected to rise to 7% as against 5.8% for FY17 due to lower than expected revenues. The two indicators do not portray any encouraging economic outlook. The conservative estimates show that Pakistan’s external funding requirement next year to grow US$20billion.