Muhammad Zubair VS Hammad Azhar
On the completion of 200 days of Imran Khan-led Pakistan Tehreem-I-Insaf (PTI) government, Truth Tracker talks exclusively to PML-N leader and former Sindh governor Dr Muhammad Zubair and Minister of State for Revenue Hammad Azhar.
Zubair raised the following serious points about the performance of PTI government during the first 200 days in power:
- More than 400 development projects have been shut down;
- Gas tariffs have increased by 143%;
- Electrify tariffs for domestic users have increased by R 2.70;
- Foreign reserves have gone down by $1.75 billion;
- News taxes, worth Rs178.00 billion have been imposed in the recent mini budget;
- Internal and external debt volume have increased by Rs 2,000 billion;
- Inflation has gone up to 8.2% – almost double from the last year;
- Policy rates have gone up to 10.25% from 5.75% last year;
- Tax revenue growth has been the worst in 20 years;
- GDP growth is in a fast decline with large scale manufacturing in negative, agriculture growth almost stagnant;
- Fiscal deficit has widened significantly compared to last year. Expenditures have also significantly goes up;
- Circular debt has gone up from Rs1.1 tr to 1.6 tr – fastest increase in our history.
- By the end of June, the PTI government will post the highest fiscal deficit (amount wise ) in our history;
- In spite of massive devaluation, exports have increased only 2% in last eight months. Compare that with 13% increase in last fiscal year.
- Regarding debt increases, it’s the fastest accumulation in our history;
- Unemployment is rising by the day and its expected that by fiscal year end, 600,000 Pakistanis will have lost their jobs;
- The most alarming news is that due to poor economy, more than 4 million Pakistanis will go below poverty line.
Zubair added that the PTI supporters will feel embarrassed with these numbers. Gone completely out of the PTI narrative is any references of its commitment of 1 crore jobs and 50 lac housing units.
However, while talking to Truth Tracker Minister of State for Revenue Barrister Hammad Azhar termed these figures the worst case of inaccurate numbers and half-truths presented by Muhammad Zubair in his cooked up 18 points about Pakistan’s economy.
For Mr. Azhar, the reality is:
- The PML-N included hundreds of projects in the PSDP without allocating even 5% funds for them. It was nothing but a political gimmick in the election year;
- Gas Tariffs have increased by 143%? A classic half-truth. Gas Tariffs are cascaded with a 10% increase for lowest consumer group and a 143% increase for highest income groups. The government is bound to notify OGRA prices within 15 days which the PML-N government did not do for 2.5 years leading to losses above Rs 150 billion in 2 years.
- Electricity Tariff has increased by Rs2.70? Same cascading as gas – highiest tariff increase for highest income groups and no increase for 70% of the consumers falling in the lowest consumption bracket. Power sector losses increased by Rs 452 billion in just one year of the PML-N.
- Decrease of $1.75 in forex reserves? During PML-N’s tenure, forex reserves were depleting at a rate of approximately $1 billion per month.The PTI not only arrested this slide after its six months but forex reserves actually rose by $40 million in January.
- New Taxes worth Rs178 billion imposed in Mini Budget? Incorrect. Taxes and RD’s in luxury goods and consumption items of high income groups worth Rs90 billion were levied. Remaining were administrative measures of Rs92 billion with no change in any taxes.
- Internal and external debt increased by Rs 2000 billion? Of them, Rs1300 billion is due to devaluation’s impact on old debt stock that was borrowed by the PPP and the PML-N. Remaining borrowing in the first six months of this fiscal year is less than for same period last year.
- Inflation gone up to 8.2%- almost double from last year? Inflation was 5.8% when PML-N left government. It has not doubled in PTI’s first six months. Although inflation did double in PML-N’s first 6 months in power in 2013.
- Policy Rate gone up to 10.25% from 5.75%. Policy rate started increasing from Jan 2018 when PML-N was in power and had to be increased to maintain the Real Interest Rate (adjusted for inflation) at the regional average of 4%. It is pertinent to note that private sector borrowing has jumped by 92% during PTI’s first 6 months.
- Tax revenue growth worst in 6 years? PML-N missed its revenue target by Rs 260 billion in outgoing year yet gave its last budget that eliminated more than Rs100 billion of government revenue streams. The PTI did not resort to harsh indirect revenue measures to make up for the shortfalls the last government left. Also Rs100 billion of telecom taxes stayed by the Supreme Court in June and PTI has reduced GST of petroleum products from 28% to 17% (2.75% GST in first 3 months) causing a revenue decline of Rs 60 billion.
- GDP growth in fast decline with large scale manufacturing negative, agriculture growth almost stagnant? The last 10 years have seen lowest average econ growth period since 1971. But the economy still had to be stabilised thanks to the deficit financed artificial growth in last two years of the PML-N. That facade of growth caused fiscal deficit to cross Rs 2300 billion, C/A deficit will rise by seven times in five years landing Pakistan in a massive forex crises. However, C/A deficit fell by 48% in January 2019 and trade deficit by 25% after building up for five years. The economy is out of danger now but still being stabilised from a consumption led artificial growth period of last two years that bankrupted us.
- Fiscal deficit widens significantly compared to last year. Expenditure also goes up? Despite higher interest and defence related payments, the fiscal deficit will be lesser than last year at the close of this FY. Current expenditures of the federal government (minus interest and defence) have risen by 3% despite inflation higher than 3%.
- Circular debt gone up from Rs 1.1 trillion to 1.6 trillion- fastest increase in our history? Wrong. The build up of circular debt is much slower less than last year. The PML-N added Rs 453 Billion to circular debt in just its last year. It also failed to incorporate capacity charges it had signed with various power plants thereby significantly adding to power sector losses.
- At the end of June, PTI government will post the highest fiscal deficit (amount wise) in our history? Fiscal deficit as one percent of GDP will be less than last year. Although ‘Amount Wise'(correct term is absolute numbers), the fiscal deficit that PML-N left was the highest in Pakistan’s history.
- In spite of massive devaluation, exports increased by only 2% in last 8 months. Compare that with 13% increase in last fiscal year? This is where we expose the deceit of PML-N numbers spin. Note that they say that exports increased by 13% in their last year but don’t disclose that it kept decreasing in the preceding years. Exports was a % of GDP almost halved during PML-N’s 5 years and also decreased in absolute terms by $1.6 billion in five years instead of increasing to $100 billion that Nawaz Sharif promised in 2013. The devaluation and energy price reductions to exporters that PTI has offered came in place post November and with a short time lag, we expect exports to show strong growth IA.
- Regarding debt increases, it is the fastest accumulation in our history? Minus devaluation’s impact on older debt stock in rupee terms, debt accumulation is slower than last year. The PML-N mentioned in its last budget document that the massive deficits it was leaving the nation with will have to be financed purely by debt. But PTI will create non debt inflows during its term.
- unemployment rising and expected that 600,000 will lose jobs by year end? Pure conjecture. With the private sector borrowing up and exporters gearing up for higher productions and foreign investors showing unpreceded interest, Pakistan is readjusting for investment and employment led growth.
- More than four million Pakistanis will go below poverty line? Pure conjecture again and fake propaganda. Also, the most comprehensive and consolidated poverty alleviation program is being developed that is to be unveiled soon.
Mr. Hammad added that instead of feeling embarrassed and red faced over the complete bankruptcy that PML-N left us with, it is sad that their spokespersons resort to number gimmickry and fake propaganda. Pakistan’s economy is healing from deep damage caused by the highest ever twin deficits, tripling of SOE losses, halving of exports as a % of GDP, multiplication of circular debt, first time losses in gas cos during last 5 years of PML-N. InshAllah the economy will not only turn around during PTI’s term but our growth path will be higher and sustainable as compared to last 10 years.