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Pakistan Reader# 691, 13 November 2023

PTI’s “White Paper” on Pakistan’s Economic Challenges: Analyzing Pakistan’s economic challenges under PDM



Pakistan Tehreek-e-Insaf (PTI) released a white paper, providing a detailed insight into the “catastrophe” of economic challenges

Dhriti Mukherjee

On 12 November, the Pakistan Tehreek-e-Insaf (PTI) released a white paper, providing a detailed insight into the “catastrophe” of economic challenges inherited from the Pakistan Muslim League-Nawaz (PML-N) government’s tenure (2013-2018) and shedding light on the subsequent “economic developments” under the PTI’s governance. Additionally, the white paper critically assesses the economic policies pursued by the Pakistan Democratic Movement (PDM) coalition government from April 2022 to August 2023.
 
PTI’s inherited challenges and stated achievements

  • PTI’s economic challenges. Key figures underscored the severity of the situation, with a current account deficit (CAD) of USD 19.2 billion and State Bank of Pakistan (SBP) reserves at a mere USD 9.4 billion. Immediate funding needs were estimated at USD 32 billion for looming loan payments, depicting the magnitude of the economic hurdles faced by the PTI government.
     
  • Economic landscape under PML-N. During the PML-N tenure, the rupee was over-valued by 23 per cent against the USD. Exports experienced a decline of USD 10 billion over five years, while imports surged by USD 23 billion, creating a substantial hole of USD 33 billion in reserves. The fiscal deficit was reported at 7.6 per cent of the GDP, and there were purportedly no significant investments in the agriculture and industrial sectors.
     
  • PTI’s economic turnaround. In contrast, PTI claimed a turnaround in economic indicators during its governance, as the GDP growth surged from 5.74 per cent in 2020-21 to 6.1 per cent in 2021-22. Noteworthy sectoral growth figures were presented, including agriculture, Large Scale Manufacturing (LSM), overall industrial growth, and services sector growth. The document also highlighted consistent growth in exports, remittances, and tax collection, with record highs of USD 32 billion, USD 31 billion, and USD 22 billion, respectively. PTI claimed to have created 5.5 million new jobs in three years.
     
  • Reductions and growth achievements. There were reductions in the CAD from USD 19.2 billion in 2018 to USD 17.3 billion in 2022, and growth in export of goods from USD 24.8 billion to USD 32.5 billion. The total exports as a percentage of GDP reportedly increased from USD 8.6 to USD 9.1 during this period.

 
PDM government’s alleged economic setbacks
PTI alleged that the PDM government, during its 16-month tenure, opened a “floodgate of inflation,” eroding the purchasing power of households and leading to a substantial increase in poverty rates. PTI claimed that the PDM government’s economic policies resulted in the lowest overall GDP growth in 75 years, recorded at 0.5 per cent. Annual inflation during the PDM government was reported at 38 per cent, in contrast to PTI’s 12.2 per cent. Food inflation was highlighted as a significant concern, reaching 50 per cent under the PDM government compared to 14.8 per cent during PTI’s tenure.
 
Additionally, the white paper alleged that the PDM government broke records in backbreaking inflation and unemployment, rendering over two million people jobless and pushing 20 million below the poverty line within 16 months.
 
Comparing economic metrics

  • Remittances and exports under PDM. During the PDM government, PTI asserted that remittances declined to USD 27 billion compared to USD 31.3 billion left by PTI, and exports dipped to USD 27.7 billion versus USD 31.7 billion in PTI’s last year. There was a further claim mentioned in the white paper of a depletion of foreign reserves during the PDM government.
     
  • Debt accumulation. Almost USD 71 billion additional debt was accumulated in 16 months under the PDM government, surpassing PTI’s USD 65 billion in 40 months despite facing the challenges posed by the COVID-19 pandemic. PTI attributed this to “reckless spending and tax breaks for political bribery,” leading to the fastest accumulation of debt in Pakistan’s history.
     
  • GDP decline and projections. There was a significant decline in GDP growth to zero per cent under the PDM government, compared to 6 per cent under the PTI government. IMF staff estimates projected a negative growth of -0.5 per cent in FY23 under the PDM government, whereas PDM estimates indicated 0.3 per cent growth.

References
Rizwan Shehzad, “PTI’s white paper ‘exposes’ PML-N’s ‘economic catastrophe',” The Express Tribune, 13 November 2023
PTI issues ‘white paper’ on state of economy,” Business Recorder, 13 November 2023

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