Spearhead Analysis – 31.07.2017
By Farrukh Karamat
Senior Research Coordinator, Spearhead Research
With the drop scene of the Panamagate trial, the Prime Minister has been dismissed. The surprising part is that he has not been dismissed over corruption or Panamagate allegations, but rather due to the failure to disclose an income of Dhs. 10,000 per month from his employment in his son’s company in UAE. That is not the end of it though, as the Supreme Court has directed the National Accountability Bureau (NAB) to file references against Mr. Sharif and his immediate family members, including the Finance Minister, Mr. Ishaq Dar. Amid all this, while the opposition parties are jubilant, the ex-Prime Minister is at a loss to understand why he has been dismissed and keeps asking, “Please tell me, what have I done to deserve this fate?”. Imran Khan and PTI held a massive rally in Islamabad to celebrate their ‘victory’ and the PML-N is gearing up to install Mr. Shahbaz Sharif as the Prime Minister after the interim stint of Mr. Shahid Khaqan Abbasi. The latter gentleman is facing a Rs.220 Billion corruption inquiry being carried out by the NAB, while there is conjecture that Mr. Shahbaz Sharif could be implicated in the Hudaibiya Paper Mill case. Rumours are also afoot that the reins of power in Punjab will pass on to the prodigal son, Hamza Shahbaz.
It would appear that a lot is rotten in the state of Pakistan and the Supreme Court decision might have triggered a Tsunami of unrest and uncertainty for the country. It is indeed surprising that after four years of lack of Governance and mismanagement of the country and its institutions and allegations of corruption in Panamagate, the Prime Minister was actually dismissed over a paltry sum of Dhs. 10,000 per month. For by not disclosing that receivable (asset) he was not deemed to be Sadiq and Ameen (as per Article 62 and 63 of the Constitution). A clause inserted by a Military dictator of the past. The dynastic rule of the PML-N is expected to continue, as Khawaja Saad Rafique categorically stated that no matter how many Sharifs you dismiss, we will keep replacing them with a never ending supply of Sharifs. Something akin to the PPP slogan of “Tum Kitnay Bhutto Maro Gay, Har Ghar se Bhutto Niklay Ga.”
Politics aside, the economic and fiscal track record of the PML-N government over the past four years has not been particularly stellar. The State Owned Enterprises have shown no improvement and are all but insolvent and bankrupt; Exports are rapidly going down; Imports are on the rise; FDI is low; Remittances have fallen; Circular Debt is on the rise; Public Debt keeps rising; Industrial sector is in doldrums and agriculture is faltering. The list goes on. Amid all this CPEC is cited as a game-changer, though at what cost remains to be seen. The events of the past few months have impacted the economic outlook for the country as the energies of all the Ministers and their Ministries were honed in on protecting the Prime Minister and his family, rather than managing the affairs of the state. However, the economic blame cannot be solely placed on Panamagate. The Government has been underperforming and the economic prospects and macro-economic indicators have been on a downward trajectory for some time now. The issue now is that the Trade Deficit and Balance of Payments have reached alarming proportions, and in the absence of viable and real revenue generation opportunities, the Government is forced to rely on Debt to keep the boat afloat. Yes, the stock market has taken a hit in recent weeks and could partially be explained by the Panamagate fallout. This, however, is not a sudden decline as reports of foreign equity investors moving out of Pakistan began sometime back, as news of the soaring current account deficit started to trickle out. At US$12 Billion the deficit is an alarming four times the current account deficit in the year before.
The much touted IMF programme of US$6.6 Billion is reported to have had 12 waivers given by the IMF over a three-year period to continue its relationship with Pakistan. Just as in the case of IMF programme it becomes equally imperative in the case of CPEC to understand what has been conceded by the PML-N government to keep the programmes afloat. What is visible are the high-cost road and rail infrastructure projects, and the stark reality of under-funded Education, Sanitation, and Healthcare projects. There is a trail of power projects which have failed to deliver as per expectations, and a track record of under-achievement on most economic fronts.
The dangerous trend is that the Government seems to have failed to learn from its mistakes and has been unable to make efforts to bring about genuine, institutional and structural reforms. In fact, it appears as if the Government is clueless about resolving the issues facing Pakistan beyond contracting additional debt to meet shortfalls. The concern is with self-preservation and a continuation of the dynastic rule. Amidst all this there is heightened uncertainty, which may impact the deteriorating financial position of the country. The tragedy is that in Pakistan no one wants to let go of power, and clings to it for as long as possible and at any cost. The recent example of the indicted SECP Chairman is a case in point amongst many other. The initial euphoria over the dismissal of a ‘popularly elected’ Prime Minister might be short-lived, as the new King maintains the status quo with no meaningful resolution to the myriad challenges facing Pakistan. However, the world and most Pakistanis are hoping for a peaceful and constitutional change that moves the country towards stability and the elections in 2018. They also hope that personal vendettas and ambitions will not jeopardize the gains made in the security sphere and the potential of the CPEC. The last thing people want is a witch hunt that dredges up past events to put at risk our present and future. The country, its institutions and people have shown remarkable resilience by remaining functional and committed in spite of all the mis-governance; and, what is truly remarkable is that the country has achieved a 5 percent growth rate. This demonstrates what Pakistan is capable of if correctly governed by credible teams of competent and dedicated people.