What is the main difference between the economic management and decision-making of the PTI and the PML-N? PTI reprimanded the PML-N for the economic crisis they inherited, but took responsibility for harsh treatment (economic chemotherapy) and owning difficult decisions, even when they were unpopular politically. Meanwhile, the PML-N is criticizing PTI for inheriting an economic crisis but failing to take the necessary action or ownership in government. Making solid economic decisions is excellent governance while blaming is good politics. Both are required of a government party.
Let’s start with the economic catastrophe they both inherited and then look at how they made decisions. To put it another way, PTI’s main issue in 2018 was inheriting an unsustainable current account deficit at a time when the country was on the verge of defaulting on its foreign debt, but PML-N’s main task today is removing fuel subsidies. Our economy suffered greatly during the first two years of the PTI government. That’s because Asad Umar was given a sick Pakistani economy yearning for air (read dollars) by the PML-N.
The main issue was a $20 billion current account imbalance caused by Dar’s obsession with maintaining the rupee artificially inflated against the dollar. Due to an artificially inflated rupee, importing commodities was cheaper than producing them in Pakistan or exporting goods. As a result, our sector shrank, exports fell under PML-N’s time, and imports we couldn’t pay soared, putting us on the brink of bankruptcy when PTI took over.
PTI made politically unpleasant but sensible moves to remedy these wrongdoings, including harsh currency depreciation. The plan was to first save the economy, then stabilize it, and then put it on a path to recovery. Covid-19 struck around halfway through the stabilization process. Despite the epidemic, Pakistan has grown at a rate of over 5% for the past two years. This was so excellent that the PML-N claimed last year that the PTI administration fudged the data, only to have the numbers validated this year after ousting the PTI government.
This isn’t to say that PTI wasn’t guilty of its fiscal transgressions. A hefty but unsustainable gasoline subsidy earlier this year was one of them. This subsidy was ostensibly offered to rescue Imran Khan’s government, but now that the government has fallen, the subsidy hangs around PML-N’s neck like a noose, paralyzing economic decision-making via fear. PML-N should rightfully condemn PTI for an unwise economic strategy, but then take responsibility and act decisively, even when it’s difficult as PTI did after assuming office.
PML-N may argue that PML-N is part of a coalition PDM government and that it is unfair for them to bear the brunt of the difficult decisions unless the boys can guarantee that they will stay in power for another year and a half and that it is also too early to assess PML-N’s economic performance. Let’s take a look at each of these arguments one by one to see where they stand and where they don’t.
Is the PML-N a member of a PDM coalition government that came to office as a result of a pact with the boys to depose Imran Khan? Yes. Is this a justification to avoid making difficult economic decisions? No, this is the purpose of government and governance. In reality, you had the perfect opportunity to completely blame Imran Khan for the gasoline subsidy and get it reversed on day one. You didn’t do it. You took your time. I flew to Saudi Arabia, London, and the United Arab Emirates, and now I’m the owner of the highly heated political football that is the gasoline subsidy. That is not just terrible economics; it is also awful politics.
The counter-argument is that no one anticipated Imran Khan being able to mobilize the kind of popular, passionate support that he has. Now it’s up to the guys to give reassurance and make difficult decisions on their own. This is interesting coming from a party that argued for the guys having a restricted role, but more importantly if you couldn’t make the judgments, why would you vote no confidence in Imran Khan when you could have forced him to make these difficult decisions and extracted a political price? The people of Pakistan will pay a high price for PDM’s economic indecisiveness, which is the result of a severe political mistake.