PPP’s 5-year Regime The Best Revenge!

With governments in Islamabad, Sindh, Khyber Pukhtunkhwa, Balochistan, Gilgit-Baltistan and Azad Jammu and Kashmir (AJK), they are cracking jokes at a funeral while they weigh the government’s five-year feats. Whatever the excuse, if any, one doubts — whatever they boast of the five years of democracy — corruption tops the list plus the most-discussed and moaned power crisis being faced by the country.

National Accountability Bureau (NAB) Chairman Admiral (retd) Fasih Bukhari’s latest disclosure that Pakistan loses up to Rs 8 billion a day in corruption has exceeded even the otherwise massive corruption figures by Transparency International Pakistan (TIP), which sees Rs 8,500 billion corruption during the first four years of the PPP tenure led by (sacked) prime minister Yousaf Raza Gilani. Yet the per-day-corruption of Rs 8 billion as pointed out by the NAB chairman means corruption for Rs 2.9 trillion in one year and Rs 14.5 trillion in five years. The oil mafia, agriculture cartel and tax-evasion/theft are the major culprits.

This disclosure by the NAB chairman presents a far dismal picture compared to the one given by the TIP in respect of the mounting corruption in Pakistan. The TIP has pointed out that Pakistan lost more than Rs 8,500 billion (Rs 8.5 trillion or $94 billion) in corruption, tax-evasion and bad governance during the PPP government’s four-year tenure. But these figures were strongly contested by the PPP government and its leaders. The TIP had pointed out corruption of Rs 390 billion in 2008, Rs 450 billion in 2009, Rs 825 billion in 2010 and Rs 1,100 billion in 2011 under the present government. The total corruption from these identified cases is Rs 2,765 billion.

In addition, according to the TIP, the minister for finance has confirmed corruption in the FBR of over Rs 500 billion per year, which makes the total Rs 2,000 billion. The Auditor General of Pakistan pointed out Rs 315 billion corruption in 2010; the Public Accounts Committee (PAC) recovered Rs 115 billion in 30 months till 2011; the circular debt is Rs 190 billion; the KESC was given Rs 55 billion illegal benefits per annum since 2008; the state-owned enterprises like PSO, PIA, Pakistan Steel, Railways, SSGC, SNGC are devouring Rs 150-300 billion per annum; the tax to the GDP ratio in 2008 was 11%, which came down in 2011 to 9.1% instead of registering an increase.

Syed Yousaf Raza Gilani’s tenure has been perceived worldwide as the most corrupt backed by plunderers of the national wealth who were protected, rewarded and even offered key positions instead of being tried and imprisoned. It was due to the government’s bad repute that even during times of natural disasters like devastating floods 29 countries refused cash help to the PPP’s government.

In the context of the PPP’s corruption cases like the rental power projects, the Ogra scam, the Ephedrine quota and the smuggling issue, the running of PIA like a ‘mom and dad store’, the Haj scam, the Pakistan Steel plunder, bungling in Pakistan Railways, to name a few, the five-year performance of the government is far from satisfactory. The government’s term remained marked with controversies and failures, which contributed towards a weak federation. The PPP-led government did only one thing very well; it resorted to every petty tactic to prolong its rule.

 In doing so, the government borrowed a mammoth more than $20 billion from international lending agencies. The external debt burden was over $46 billion in June 2008, and as of September 2012 it soared to $66.24 billion, higher by 46 per cent when the PPP-led coalition government came into power in the Centre. Where did this $20 billion go? No betterment of the people and no big project executed, rather the bulk of the foreign borrowing was spent on government’s expenditures.

Indeed, the government’s expenditures are of non-development nature. The PPP-led coalition government’s current expenditure graph also portrays the extravagant trend. The current expenditure amounted to Rs 1649.2 billion during fiscal 2008-2009. The volume of the current expenditure was Rs 2314.8 billion in fiscal 2011-12, whereas the government estimates current expenditures to the tune of Rs 2767 billion during fiscal 2012-2013.

Likewise, a similar precedence is set in the government’s borrowing from the banking sector. A hefty Rs 4845.4 billion of the domestic debt is accrued during the tenure so far. The portfolio of domestic debt is Rs 8120.1 billion as on September 2012 up by 148 per cent when the PPP was not in power. The domestic debt was Rs 3274.7 billion in June 2008. The government is now minting money from the State Bank of Pakistan (SBP). The repercussions in the days to come will be more horrifying than what experts think. One reflection of this bad practice is the dwindling rupee value against the US dollar.

Now, the PPP-led power forces face a Herculean task of a $5 billion payback to the International Monetary Fund (IMF). The foreign exchange reserves were $11.40 billion in June 2008. It was $12.43 billion in 2009, $16.75 billion in 2010, $18.24 billion in 2011 and $15.28 billion in 2012. The forex were $13.558 billion as on January 4 this year. The reserves will sink drastically once the payment to the IMF is made. The new bailout package with the international lending agency is less likely as the government is nearing completion of its five-year term in less than two months’ time.

The military regime of General Pervez Musharraf bequeathed the power crises as all and sundry in the government bemoaned and cried hoarse. The Musharraf saga continues even now because six to 18 hours of prolonged incessant load-shedding has paralysed economic activities in Pakistan. The worst-affected is the Punjab. Many believe since the PPP has not its government in the province, it is punishing the people. For the last five years the Punjab has been the centre of agitation by the general public over lack of electricity. Whether it is Multan, Faisalabad or Lahore the people took to the streets against the menace of load-shedding frequently during summer every year. The government failed in overcoming the circular debt. The government owes Rs 445.7 billion to oil and gas companies and Independent Power Producers (IPPs). The government owes Rs 290 billion to the IPPs, Rs 24.2 billion to PSO, Rs 29 billion to gas companies and Rs 76.9 billion to Wapda for hydel generation. The private sector is the biggest defaulter that owes Rs 197.3 billion to the federal government, followed by Sindh with Rs 55 billion, Punjab Rs 7 billion, Khyber Pakhtunkhwa Rs 20 billion and Balochistan owes Rs 3.7 billion.

The federal government’s different departments have not paid their electricity dues to the tune of Rs 13.8 billion. The AJK government owes Rs 16.4 billion, the federally-administered tribal areas Rs 25.3 billion and the Karachi Electricity Supply Company (KESC) owe Rs 59.3 billion to the federal government. Yet hardly any concrete measure has been as regards the clearing of the circular debt or the recovering of dues from the provinces and other departments. Around Rs 2 trillion have been spent on the power sector subsidies in the first half of current fiscal. The rates of electricity and gas have been tripled so taxes on their consumption, but the government failed in making a single significant achievement. CNG is sold for Rs 67 a kilo in now. To remember, it was just Rs 37 back in 2008; petrol was around 63 rupees a litre compared to Rs 103 in 2013. Diesel is also costlier — sold for Rs 94.34 as against Rs 44.13 per litre in 2008, whereas the LPG rate was Rs 53 per kilo as against the current rate of over Rs 150 a kilo.

The government figures claim to have curtailed inflation. The food inflation was 17.60 per cent in fiscal 2007-2008. It dropped to 11 per cent in fiscal 2011-2012 and further sunk to 7.30 per cent during the first half of the current fiscal. General inflation dropped to 8.30 per cent in July-December 2012 from 12 per cent in 2008. However, items in inflation baskets and price fluctuation do not meet reality checks. The loose interest-rate regime does not necessitate lower inflation. Either it is general inflation, food inflation or the core inflation. The price of high-quality flour was Rs 16 per kilo in 2008 as compared to Rs 44 a kilo. Rice was sold at Rs 90 a kilo in 2008 as against Rs 120 now. The price of one kilo sugar is now Rs 55 in comparison with Rs 25 a kilo in 2008. The economic wizards need to probe the lower food inflation claim by the government.

External Debt

June 2008 $46.16bn
June 2009 $52.33bn
June 2010 $57.36bn
June 2011 $61.84bn
Dec 2011 $61.13bn
Sept 2012 $66.24bn

Domestic Debt

June 2008 Rs 3274.7bn
June 2009 Rs 3860.6bn
June 2010 Rs 4894.6bn
June 2011 Rs 6231.3bn
Feb 2012 Rs 7215.3bn
Sept 2012 Rs 8120.1bn

Current expenditure

2008-09 1649.2bn
2009-10 1699bn
2010-11 2295bn
2011-12 2314.8bn
2012-13 2767bn