Anjum Ibrahim

Ishaq Dar, the Federal Finance Minister, has the easiest job in the cabinet so argue his detractors: not because the economy is doing particularly well but because he has the ear of the Prime Minister (to the exclusion of all others especially those with capacity backed by qualifications and experience to analyze the state of the economy). And the Prime Minister has shown visible irritation against all those who challenge Dar’s assessment of the state of the economy.

So what is the state of the actual economy? And what does Dar cite as proof positive that the economy is doing well? The source of data on which international donor agencies as well as international journals rely is the Pakistan Bureau of Statistics (PBS) which is under the administrative control of the Minister of Finance. Ironically, Dar is on record as having repeatedly accused Shaukat Aziz, Musharraf appointed Prime Minister who kept the Finance portfolio, of manipulating data referring to it as ‘criminal fudging’. Dar’s proof: the 2007-08 budgetary overrun was due to 138 billion rupee subsidy on petroleum products, 70 billion rupees on account of non payment to Wapda and 45 billion rupees on import of wheat with no budgetary provisions made for either of these expenditures.

So what has Dar done that raised the hackles of independent economists as soon as he took over the finance portfolio? He began his tenure by borrowing a whopping 480 billion rupees on the second last day of 2012-13 - the year he no doubt thought would be associated with the PPP led coalition government and the three months of the Caretakers. The purpose of the borrowing was to retire the circular energy debt and the method of borrowing was declared “irregular payment…without pre-audit” by the Auditor General of Pakistan, a known close associate of Ishaq Dar’s in a special report. During his budget speech in June 2013 Dar stated “the revised estimate for deficit for 2012-13 is 2024 billion rupees or 8.8 percent of GDP,” and 480 billion rupees, his own contribution to the deficit, is 24 percent of the total.

Secondly, and even more disturbingly the PBS, now under Dar’s administrative control, decided for the first in its history to lower the growth rate not of the year before (2012-13), which may have been acceptable, but of two years before. The reason: to allow Dar to claim in the 2014-15 budget speech that the country achieved the highest growth rate since the fall of Musharraf’s government due to his year-long economic management. The basis of the downgrade in the growth rate has never been shared with the public in spite of repeated requests by economists and journalists, which has simply fuelled credibility issues that remain unresolved to this day.

Independent economists have been challenging the growth figures released by PBS since Dar took over the Finance portfolio and basing their challenge on the data released by other government departments as well as some sector organizations known for credible data; again no effort has been made by the PBS to allay these concerns though the PBS continues to insist that its data is accurate; the Finance Minister’s approach to criticism is to launch a harangue against those who challenge his management of the economy – media, independent economists, exporters, industrialists, farmers alike.

However, the list of Dar’s detractors is no longer limited to members of the opposition or indeed members of the academia who he claims performed poorly when they held the portfolio (referring to what many believe is Dr Hafiz Pasha) and engaged in similar cover up activities through data manipulation (reference to former Economic Advisors who have come out against his policies). His detractors now include members of the federal cabinet – his own party loyalists. The Minister of Commerce has now begun to publicly state that his Ministry is not the only stakeholder in declining exports and that the Ministry of Finance, Water and Power, Petroleum and Natural Resources and Ministry of Industries and Production are equally at fault. Finance negatively impacts on exports through its support for an over valued rupee, and delays in refunds; and significantly the Ministry of Water and Power as well as Petroleum also suffer from policy decisions by the Minister of Finance that include refusal to release funds that would allow Pakistan State Oil to import fuel as the sector remains shackled in the circular debt. Additionally, Finance’s contribution to high fuel costs is evident through its continued heavy reliance on fuel as a source of easy revenue rather than through reforming the tax structure and improving governance of the Federal Board of Revenue. And as far as the Minister of Industries and Production is concerned he has repeatedly stated that he has little if any control over his Ministry and the more powerful ministers, particularly Ishaq Dar, routinely take decisions relating to his Ministry.

So how does the general public view Ishaq Dar? There have been no surveys to determine Dar’s popularity however the general perception is that as he is associated with the rise in taxes particularly on fuel, electricity and mobile SIMS he is not well regarded by the general public. An anecdotal survey carried out by Business Recorder however revealed that the public felt that the responsibility for Dar’s flawed policies eventually rests with the Prime Minister who should take on a more hands-on interest in policies that are backed by obviously doctored data instead of persisting in placing blind trust on his management of the economy.

Prime Minister Nawaz Sharif has shown a marked reluctance to revisit his decisions especially with respect to his appointments - be they members of his federal cabinet or heads of autonomous organizations including PIA and the cricket board. But a good policy in democracies, which distinguish it from dictatorships, is to strengthen institutions that would stand the party in good stead when in opposition. In Pakistan, two factors have militated against following this obviously sane advice: (i) Zardari led government was the only one that was allowed to complete its tenure in recent years, and so the culture of being voted out as opposed to dismissed is only one-tenure old. In addition, Nawaz Sharif, like Zardari when in government, believes that his party would win the next elections based on the mega projects he has initiated and/or completed. It is relevant to note that Zardari felt his party would win the 2013 elections based on the Benazir Income Support Programme and the large number of electables in his party. No lessons have been learned by the PML-N from PPP’s defeat – lessons that must include the fact that cities, more susceptible to mega scams of the leadership (with Panama certainly regarded as a scam in the cities), voted against the PPP in 2013. Thus 37 seats from 15 Punjab cities in 2008 declined to only 3 from the same cities in 2013 for the PPP.

So what must the Prime Minister do to protect his party while in opposition? First, he must delink PBS from the Finance Ministry’s administrative control. Second, he must discourage his finance minister or any other minister from engaging in ministry/department promotions and set up a transparent and effective committee that would take appointment decisions which would stop subsequent administrations from appointing on the basis of influence rather than merit. This would stand his party in good stead when in opposition. And finally, the FIA, NAB and FBR must be empowered to take action based on facts rather than on who is in power at that moment in time.