Tracing economic aspect of Pakistan’s U-turn over its nuclear attack warning to India
On Monday, Pakistan’s Prime Minister Imran Khan took a fresh U-turn over his prior warning to India of a nuclear attack. Pakistani Prime Minister, Imran Khan has repeatedly talked about the nuclear shadow hovering over the south Asian region. However, on Monday, he made the following statement “There will be no first from our side ever”. His remarks came on the back of earlier statements talking about the threat of a nuclear war in South Asia.
Well, one can easily tell that this U-turn might have come after Modi’s effective diplomatic foreign and defence policies but here’s an economic aspect too. This economic crisis in Pakistan is killing its people intensively and obviously, Pakistan’s immediate problem is not Kashmir but its dying economy.
The recent data shared by the Ministry of Finance of Pakistan, tells us that the first year of Pakistan’s Tehreek-i-Insaaf (PTI) government has led its economy into a drain. Each and every newspaper, media house, scholars who are covering this data may easily tell that there are zero improvements in the dying economy of Pakistan.
In the last year, the country’s GDP has consistently declined also the fiscal deficit has grown fast. Though the fiscal deficit was already at its height by the Year 2017, and the PTI government has also done nothing, apart from distracting people from the real issues. By the start of the Financial year 2018-19, the government has had aimed to bring the fiscal deficit at 4.9 per cent from 6.6 per cent of 2017.
Moreover, the revenues plummeted while expenditures remained at the same level they were at the previous year when expressed as a percentage of GDP. In absolute terms, however, expenditures broke previous records while revenues were stagnant. As a result, the fiscal deficit, which is the difference between revenues and expenditures of the federal government, came in at a record 8.9 per cent of GDP.
This scenario takes us to a conclusion that even if the government has invested and has increased the expenditure, why does the revenue remains stagnant? It definitely means that the Pakistani government needs to concentrate on it.
Also, the very boasting of its defence strategy is not working in pro of the nation. The defence expenditures of this nation have increased in comparison to the year 2017, which doesn’t give them a worth benefit as its contribution in GDP is 3% which is same as the year 2017-18, I.e. unchanged. Now in this condition, if Pakistan goes for war, it will definitely die in the mid only, as it doesn’t have enough money to survive.
“I have never seen such a high fiscal deficit in my career,” said Dr Ashfaque Hassan Khan, the former economic adviser and now dean of the business school at National University of Science and Technology (NUST), He contends the increase in discount rate under the IMF program contributed about Rs1,110 billion to the interest payments, including Rs. 1,020 billion on domestic debt and around Rs 90 billion on external debt.
Secondly, he attributed the devaluation of the exchange rate to the problem, claiming “it also added about Rs3.2 trillion to the public debt. When interest payments go up, so does current expenditure and total expenditure”.
Just as the defence sector, the tax revenue has also remained unchanged, also without making any contribution to its company’s GDP. Rather it has fallen to 11.6 per cent from 13 per cent in 2017-18. The non-tax revenue has also fallen to Rs. 427 billion from Rs 760 billion in 2017-18.
Of course, the credit for increment in Pakistan’s fiscal deficit should be given to the Modi government too (to some extent) as the major jump Pakistani economy took towards the drain in the last quarter of the financial year 2018-19. By June 2019, the government had targeted to stop it’s country’s fiscal deficit at 7.1 per cent but due to Kashmir issue.