Lack of control and indecisiveness of the ousted Pakistan Tehreek-i-Insaf (PTI) government led the country to brink of a severe fiscal crisis in 2019. Imran Khan himself travelled to the United Arab Emirates to meet the IMF chief and assured her that he would undertake significant governance and structural reforms in the country. The government then barely managed to stabilize the national economy when IMF responding to the rescue calls approved a programme for Pakistan in July 2019.
Accordingly, IMF’s Executive Board approved a $6 billion Extended Finance Facility (EFF) for Pakistan. Since then, there have been several phases of ups and downs in the IMF-Pakistan relationship. At times, the disbursement was delayed due to non-performance of commitments by ex Government of Pakistan. IMF acting managing director David Lipton, said that “Pakistan is facing significant economic challenges on the back of large fiscal and financial needs and weak and unbalanced growth.” The national economy got severely affected due to these delays. The reason of these delays in the programme was mainly the failure of Pakistan to initiate the agreed reforms.
Currently, Pakistan is facing a severe economic challenge on account of debts. In the fiscal year (FY) 21, these rose to 100.3 percent of the gross domestic product (GDP). Pakistan’s gross external financing needs in FY 23 and FY 24 are estimated to be around $77 billion. The situation is getting more complicated, given the deteriorating current account balance.
According to Senator Saleem Mandviwalla, “50 percent devaluation of Pak Rupee in four years rule of PTI government has triggered a massive wave of inflation across the country, as coal, furnace oil, liquefied natural gas and diesel are being imported for power generation, while the fuel cost is a pass-through item. More importantly, the import of edible oil, pulses, wheat, sugar and other food items has triggered a hike in inflation, causing unrest among the masses”. He further added that, “the country’s expenditures have increased to Rs7.5 trillion from 4.2 trillion with a massive increase of mark-up payment of Rs3,000 billion due to the untimely re-profiling of government debt by the PTI government”.
He said, “the external debt and liabilities inherited at $95 billion have gone up to $127 billion, adding the country has never witnessed such a high debt in the period of three years of any previous government”.
There were two very important issue to which the former Prime Minister didn’t pay much heed. One of them was the rapidly increasing population and the other was the overall productivity in different sectors of the economy. The first issues greatly added to the already existing pressure on the state for the provision of different services and a significant increase in the carbon footprint. The other issue concerning the utilization of the available resources exposed the failure of Pakistan in accounts of the large imports of food items despite of being an agrarian country.
According to the IMF report, in FY 2021 trade with the United States, United Kingdom, Afghanistan and Germany comprised of 37 percent of the exports. Exports to the three FTA markets were only around 10 percent. Entering FTAs with major export market destinations can boost Pakistan’s exports and reduce the external imbalance.
Former Prime Minister had to face severe criticism owing to his inability to counter the economic challenges. A resolution unanimously adopted by the Jamaat-e-Islami Majlis-e-Shoora stated that, “Incompetence and inability of Imran Khan’s government has pushed the country to multiple crises. The prime minister and his team should go home and pave the way for new elections if they were unable to provide relief to the masses”.
The former Finance Minister Shaukat Tarin in a press conference admitted the fact that when PTI government came into power it didn’t have any economic plans. Therefore, with time it took time to make economic plans. He further said that the second major failure of the ousted government was the lack of any solid policy for businesses. The former Minister said Dr. Ishrat Hussain had given a good plan for state-owned enterprises but those plans were not implemented due to poor governance and sheer incompetence.