How Imran’s economic pledges fell flat

A hacked Twitter handle of the Pakistani embassy in Belgrade claimed that government officials had not been paid for three months.

The foreign office trashed the tweet message as "baseless", but it reminds of the Prime Minister Imran Khan's promise of "Naya Pakistan" made in 2018 against the stark contrast to the ground reality today, inflation galloping and miseries of common people mounting.

"Pakistan has repeatedly run into macroeconomic crises: runaway inflation, current account and trade deficits, depleting foreign reserves, and currency devaluations. It is faced with a combination of these problems again," says a report of The Indian Express.

In 2018, the year Imran Khan took office as the prime minister, Pakistan's annual economic growth was 5.8%, which fell to less than 1% a year later and further declined to 0.53% in 2020, according to the World Bank. 

The former cricket star's election campaign promised to end corruption and create jobs to make the economy help the poor. But it did not happen. 

Four years later, now Pakistan's inflation is the second highest in South Asia, its rupee losing half of its value against the dollar and citizens struggling to make ends meet.

Skyrocketing inflation has given the political opposition a window of opportunity to call for Imran's resignation.

"Despite macro[economic] factors being positive, inflation has touched a record high, taxes are increasing, the common man can't receive any benefits, and the government has no policy," Murtaza Wahab, spokesperson of the opposition Pakistan People's Party, told Bloomberg. 

In January, the country's consumer price index rose to 13% – the highest in two years.

As a result of this inflation, middle-class poverty is on the rise, squeezing the average wage earner and deteriorating standards of living.

Unprecedented price hikes of essentials gave the political opposition enough ground to organise public support against Imran and move a no-trust motion in parliament. Though the motion was dismissed in the national assembly Sunday, it was immediately followed by the presidential order to dissolve parliament, abruptly shortening his innings as the Pakistan captain in the government.

Pakistan's GDP is projected to grow at a 4-year high of 5% in current fiscal, but inflationary risks might intensify, balance of payments crisis could deepen and the country's external debt might spiral, requiring more bailouts. Inflation soared to 12.7% in February, second in South Asia after Sri Lanka. Rupee declined to 184 per Us dollar, from 124 in 2018.

Most of Imran's election pledges fell flat as its claims of positive macroeconomic indicators did not help alleviate people's suffering.

Economist Kaiser Bengali told Bloomberg that no government in Pakistan's history managed its finances as incompetently as Imran Khan's.

Imran also could not keep his pledge not to borrow from external sources as he had criticised previous governments for relying on a "begging bowl". In 2019, just a year after he took office, his government secured a $6 billion rescue loan from the IMF, pledging to reduce public debt and bring structural reforms.

Pakistan's debt now stands nearly 81% of its GDP.

Pakistan imports most items of domestic consumption, making it more vulnerable to these pressures; the increasing debt servicing obligations have added to the pressure.

"The country has already been bankrupt for more than two years. We are a debt-ridden economy, constantly surviving on loans," the economist said.

Imran cannot be blamed for all the sorrows, there was the Covid-19 pandemic, supply shocks and then the Russia-Ukraine war, which came as a political blow for Imran as the Russian strike on Ukraine coincided with his "badly timed" visit to Moscow. Moreover, Pakistan's economy is often dogged more by domestic factors than global ones. Conflict between the political government and the military is something that has gone parallel to Pakistan's journey since its birth in 1947.

This time is no exception, too. With parliament being dissolved abruptly ending Imran's term on Sunday and fresh elections likely in 90 days, Pakistan just reinforced its history of no prime minister serving full tenure.