PTI blames PML-N for economic woes in white paper amid IMF talks

ISLAMABAD: As the International Monetary Fund (IMF) deliberates the release of the second tranche of $710 million for the country, the Pakistan Tehreek-e-Insaf (PTI) has issued a White Paper, placing blame on the Pakistan Muslim League-Nawaz (PML-N)-led coalition government for the economic challenges.

According to Dawn.com, the White Paper said that the PTI government steered the country’s fragile economy towards rapid growth despite the global havoc caused by the Covid-19 pandemic.

However, it alleges that the subsequent government, imposed through a regime change conspiracy, undid the economic progress made by the PTI Chief-led administration, causing more economic turmoil than the cumulative impact of floods, earthquakes, and the pandemic.

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The document contends that when the PTI assumed office in August 2018, the economic landscape was on the verge of collapse. Key indicators cited include a $19.2 billion current account deficit (CAD) for FY2018, $9.4 billion in State Bank of Pakistan (SBP) reserves, and an immediate need for $32 billion in loan payments.

Additionally, the White Paper highlights a 23 per cent over-valuation of the rupee against the USD, a $10 billion decline in exports over five years, a $23 billion increase in imports, resulting in a $33 billion hole in reserves. The fiscal deficit was reported at 7.6 per cent of the GDP.

The White Paper further accuses the PML-N of leaving an energy sector mess by excessively building power supply through imported fuel plants with dollar-linked capacity payments. The inherited circular debt for the PTI government was Rs1.6 trillion, with annual capacity payments soaring from Rs450 billion in FY18 to Rs1.4 trillion in FY23.

Furthermore, the document outlines that Pakistan approached the IMF, subject to tough conditions that included a 325bps increase in the discount rate, electricity and gas tariff hikes, and fuel price adjustments.

In response, the PTI government allegedly reduced the fiscal deficit to 5.5 per cent of the GDP by substantially increasing taxes from Rs3.7 trillion to Rs5.5 trillion in a single year.

Despite facing challenges like the global commodity super cycle, the White Paper claims the PTI successfully managed to keep Consumer Price Index (CPI) at 12.7 per cent and Sensitive Price Index (SPI) at 14 per cent in March 2022. It asserts that due to proactive monetary and fiscal measures, the CAD started decreasing to under $1 billion per month.

Finally, the document alleges an additional Rs20 trillion debt accumulated in 16 months, surpassing the Rs18.3 trillion accumulated by the PTI in 40 months, despite the challenges posed by the Covid-19 pandemic.