Prime Minister Shehbaz Sharif told a function in Islamabad to mark the one-year anniversary of his government’s reelection that the task of stabilizing the economy had been achieved, and it was now time for it to take off. Mr Sharif can be excused a certain indulgence in hyperbole, because that has been the basis of his appeal to the electorate a year ago: that the PTI government had badly messed up in economic management, and his government had come to the rescue. That, it might be remembered, was part of the government’s appeal to the establishment, With the PTI still up in arms about the government’s legitimacy, it was a repetition of the Shahbaz government’s main charge against the PTI.
There have been good things happening to the Pakistan economy, notably the slowing down of inflation, but the government now would like the political benefit before it is too late. With the slowdown in inflation likely to continue for another couple of months after a year of deflation, why is the common man not feeling the benefits? Though interest rates have been halved, growth does not seem to have picked up, thus creating additional employment. One reason is that both consumers and investors have been bitten badly by the latest bout of inflation, and the more canny among them see another bust coming soon. Mr Sharif needs to realize that there are two problems that need fixing: government finances and exports. As government deficits need to be financed from foreign borrowing, debt is created which could be paid off if there was a trade surplus. But because we must import fuel, edible oil and pharmaceuticals. So now the government must borrow even more. The country is well and truly in the debt trap, letting in the IMF.
The government has got to face these harsh realities. It would like to get off the constricting IMF programmes, but that might mean implementing the very measures that has caused so much resentment and popular suffering. Perhaps one of the big differences between the PTI and PML(N) is not so much the level of honesty, as of realism. If the PTI relieved in magic bullets that would solve everything, in spirit; the PML(N) believes in problem-solving. So now it needs to raise more revenue, and sell more Pakistani goods to the outside world.
