PML-N govt ‘failed to fulfill’ manifesto vows

[fatman17]

ISLAMABAD: In a demeaning report, an independent think tank has said that the incumbent government underperformed during the ongoing tenure and failed to fully implement its election manifesto on the economic front, hardly achieving six of the 89 goals.

Even in areas where it had initially shown some progress, the performance deteriorated during January-June period of 2017, says the report from the Islamabad-based Policy Research Institute of Market Economy (PRIME).

The PRIME report gauges the economic performance of the ruling party on the basis of implementation of its economic manifesto announced before the elections. It is the ninth such report covering January-June period of the fourth year of the PML-N government.

Senate to discuss govt performance at ICJ

According to the report, the progress has been reversed on eliminating VIP culture by reducing expenses incurred on the Prime Minister Office and the Presidency; appointing independent professional boards of state-owned entities; eliminating circular debt; and notifying the tariffs determined by the National Electric Power Regulatory Authority.

Similarly, the progress on the goals of improved regulatory environment at the national level, publication of an annual tax directory and determining upfront tariffs for wind, solar, small hydel and biomass projects was also reversed, says the report, noting that the load-shedding of power persisted and “it may not be a far-fetched proposition that it’s not going away any sooner, even in the next year”.

The report points out that of the 89 targets, only six stand achieved, although there are serious question marks on the claim of achievement of budget deficit reduction target.

After the completion of four years, the average score in the area of economic revival stands at 4.28, which is below the satisfactory level and indicates lack of policy direction. The average score in the area of energy security remains 4.71.

The PML-N’s overall average score for four-year period now stands at 5.05. “The 5.05 doesn’t mean a glass half full, but it means a glass more than half empty,” according to the PRIME.

Govt borrowed Rs2tr to finance budget deficit in 2016-17

The areas where the government’s performance was bad were the economic growth rate target, which the PML-N could not double to 6 per cent as it promised in the election manifesto. It had also promised to bring down the budget deficit to 4 per cent but the latest estimates show that the deficit will be over 5.3% of the GDP for fiscal year 2016-17. The average score on budget deficit target was 4.45.

The only visible progress was on bringing down the inflation to single digit, which was mainly because of the overall low global inflationary environment. On the target of industry and trade, the average score was 4.19.

One of the worst performing areas was tax reforms where the score remained close to the bottom -2.87. Similarly, the government could not reverse the deteriorating fiscal and administrative performance of state-owned enterprises, with an average score of 3.25.

The government somehow managed to build confidence of the private sector but it was still not up to the mark.

The two components where it performed well were infrastructure building and creating job opportunities.

Energy Security

In the energy sector, the government could not reform NEPRA and its average score was just 3.38. Likewise, the reforms could not be introduced in power distribution and generation companies where the PML-N’s average score remained below 3.8.

These entities kept on causing heavy losses, which the government tried to cover by charging various kinds of surcharges from the power consumers.

The PML-N also failed to meet its election promise of permanently eliminating the circular debt that has again piled up to Rs400 billion. The average score on this target was only 3.38.

The Oil and Gas Regulatory Authority could not be reformed either and the PRIME gave the government a poor score of 3.75.

There was no development on the goals of converting at least 50 per cent of the remittances from Overseas Pakistanis into investments and reforming tariffs to eliminate anti-export bias. The PML-N could not establish an Equity Fund to facilitate investment by private and public sectors. It could not either fulfill its promise to tax all income, including the agriculture income, and failed to reduce the number of federal and provincial taxes, according to the PRIME.

Status quo maintained

There were areas where the previous status persisted, which did not mean that the government showed any improvement. There was no further progress in reduction in losses of PSEs and developing clusters for industries. The status quo was also maintained on the goal of bringing informal economy into the tax net, reducing tax evasion, rationalising tax rates and ensuring tax compliance by small businesses.

The government could not meet its promise of rationalising sales tax by ensuring standard rates for all items.

https://tribune.com.pk/story/1464298/pml-n-govt-failed-fulfill-manifesto-vows/

 

[fatman17]

THE EXPRESS TRIBUNE > PAKISTAN

Nawaz added whopping $35b to Pakistan’s debt

By Shahbaz Rana

Published: July 30, 2017

REUTERS

ISLAMABAD: Former prime minister Nawaz Sharif’s government obtained a whopping $35 billion in new loans during his four-year tenure to repay maturing debt and keep official foreign currency reserves at a level which could give a sense of economic stability to investors.

About $17 billion or nearly half of the total loans obtained from July 2013 to June 2017 were utilised to repay the previous debt, shows statistics maintained by the finance ministry. The government added net $18 billion to the country’s total external debt and liabilities – the highest amount added by any government during its tenure.

From July 2013 to June 2017, Pakistan’s total external debt grew by 30% to $79.2 billion, according to an International Monetary Fund (IMF) report. Out of this, external public debt was about $62.3 billion – also up by 28% compared with the figure four years ago, shows the IMF report.

The maximum number of loans – amounting to $10.1 billion, the highest taken out in any single year during the country’s 70-year history – was obtained during the last year of Nawaz’s government.

Starting from July 2013, with every passing year, the quantum of external debt kept growing due to the government’s inability to implement policies that could have ensured sufficient non-debt creating inflows.

The Supreme Court of Pakistan on Friday disqualified Nawaz on concealment of assets charges. Former finance minister Ishaq Dar would also have to face a reference in the accountability court over charges of a 91-time increase in his assets, which did not match his known sources of incomes.

On October 19, 2016, the director general debt at the finance ministry had informed the Senate Standing Committee on Finance that from July 2013 to June 2016, the PML-N government took $25 billion worth of fresh loans. He had said that net addition to external debt during the three-year period was $13 billion.

In 2013-14, the net increase in the external debt was roughly $3 billion. Similarly, in 2014-15, the net increase in debt was $4.42 billion, higher by 53% over the increase reported in the preceding year. There was a net addition of $5.6 billion in the country’s external debt during the fiscal year 2015-16, showing a growth of 28.2% over the increase in foreign debt in 2014-15, according to the ministry.

During the fiscal year 2016-17, the last government had borrowed $10.1 billion and out of which it returned about $5 billion loans.

The latest IMF report on Pakistan shows the country’s external debt at $79.2 billion by June 2017. It was $60.9 billion when the PML-N took the control of the government, according to the report. That means the government added $18.3 billion to the external debt.

In June 2013, the gross official reserves held by the State Bank of Pakistan stood at $6 billion, which increased to $16 billion by June 2017. The entire increase of $10 billion in the official foreign currency reserves was the result of borrowings, as during this period exports kept on declining.

The remaining $8 billion external debt was taken to meet the balance of payments requirements.

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According to sources in the finance ministry, maintaining official foreign currency reserves at this level is critical to giving a perception of an economic turnaround; and the former finance minister was also very sensitive about the issues of official foreign currency reserves and rupee-dollar parity.

Dar had always presented the position of the official foreign currency reserves as an example of strong economy. He would often ignore the structural weaknesses of the economy like declining levels of savings and investments in terms of Gross Domestic Product.

The IMF’s Article-IV report shows that Pakistan’s gross external debt in terms of exports was 193.2% in 2013; and this ratio deteriorated to 294.4% as of June 2017. During this period, Pakistan’s gross external financing requirements also almost doubled to $17.2 billion from $9.1 billion.

While responding to deteriorating external sector situation, the finance ministry had said last week that “external borrowing is a routine and normal function of developing countries and Pakistan is no exception.”

It had added that developing economies resort to borrowing to meet investment requirements, accelerate growth and create jobs. External borrowing is also necessitated to retire past debt, finance essential imports, build external buffers, and shore up external reserves to maintain external account sustainability in a global context.