Economic sabotage?

Ishaq Dar eagerly misses no opportunity to shift the blame for Pakistan’s economic woes, despite the disasters surrounding his stewardship of the country’s beleaguered finances.

It was in this spirit on Monday when the government forced the controversial passage of the finance bill, that Dar pointed towards the tenure of the Pakistan Tehreek-e-Insaf (PTI) government for effectively sabotaging the economy through its failure to meet conditions tied to an IMF loan.

As for the manner in which the finance bill was passed, there was a large gap left behind. When members of parliament pointed towards a lack of quorum, they were largely ignored and the bill was conveniently passed to meet a condition put forward by the IMF.

The Washington-based lender has sought parliamentary approval for a raft of recent taxation measures that have now become the law. Monday’s occasion did not mark the first time in Pakistan’s sorry political history that a law was passed irrespective of the legislative gap – lack of quorum.

But more importantly for the economy, Dar’s comments followed his public remarks just last week when he sought the appointment of a national commission to investigate the PTI’s performance during the last government.

Much can be said about the PTI’s failures ranging from a failure to take the sugar scandal to its logical conclusion, to the beginning of an unprecedented surge in food prices. But a commission that only focuses on the last tenure will serve no purpose other than arming Finance Minister Dar with a few convenient proverbial bricks to lob at the opposition.

At a time when Pakistan’s economy remains on the edge of a possible default, the present government must be made accountable for adding plenty more woes to the ones it inherited last year. Just to set the record straight, former finance minister Miftah Ismail who preceded Dar under the present government, successfully concluded an agreement with the IMF and oversaw the arrival of a held up tranche of about $1 billion last year.

And then came the mother of all economic setbacks for Pakistan in recent memory. Ismail, a well qualified economist with very presentable credentials, was summarily replaced by Dar in a changeover triggered by causes that remain a matter of debate. The reality however is that the transition at the finance ministry has only witnessed a downward journey under the present finance minister’s leadership.

He stepped into the job, promising to oversee a robust appreciation of the rupee against the US dollar and other foreign currencies. Today, the Pakistani currency’s outlook remains in tatters, a far cry from Dar’s promised goal.

Dar’s push to control the exchange rate of the rupee by exerting background pressure on the State Bank eventually backfired badly. The rupee’s value sharply plummeted following a visible shortage of foreign currencies notably the US dollar in Pakistani banks and the open market. And importers continue to be stung with artificial controls, in part driven by the government’s failure to block the smuggling of US dollars to sanction-hit Afghanistan.

To add fuel to the proverbial fire, Dar’s recent public mention of private foreign currency deposits in Pakistan being among assets of the state triggered widespread panic. For many depositors, it was a blatant reminder of the way onshore deposits were frozen in 1998 after Pakistan was slapped with punitive international sanctions following its maiden nuclear tests.

More fatally for Pakistan, the finance minister’s contemptuous remarks about the IMF in early December when he said “I don’t care [about the IMF]” may have sharpened the discomfort between Pakistan and the staff of the lender. In plain words, his remarks were akin to a borrower walking into a bank and begging for money while showering scorn upon the lender.

And last but not the least, Pakistan’s worsening political atmosphere has added to the country’s economic turmoil. On Monday as the parliament in Islamabad controversially approved recent tax measures, a high drama unfolded in Lahore. Imran Khan’s trip from his Zaman Park home to the premises of the high court – normally no more than a 10 to 15 minutes drive, immediately became the high political drama of the day and the matter of breaking news for Pakistan’s TV channels.

Going forward, Khan has served notice to begin a ‘jail bharo’ (or fill the jails) campaign from today (Wednesday), adding fuel to Pakistan’s fast spreading political fire. It is another moment for any investor – domestic or foreign – to consider staying away from exposure to Pakistan.

Together, the political and economic turmoil must draw just one conclusion: that Pakistan badly needs to hold fresh parliamentary elections quickly with a mandate for a new government. As for the present lot in power, Dar must be restrained by Prime Minister Shehbaz Sharif from pointing at others for Pakistan’s economic mishap. He has much to answer for.

The writer is an Islamabad-based journalist who writes on political and economic affairs. He can be reached at: farhanbokhari@gmail.com