Press Release - 24 August 2012
Pakistan Tehreek Insaf – Economic
PTI unveiled its economic plan for the nation which envisages a more then doubling of the growth rate of the economy through an investment and trade driven growth strategy. It also foresees a siginificant reduction in the current back breaking levels of inflation and the creation of ten million new jobs over a five year period. Most importantly it moves Pakistan towards the ideal of a sovereign welfare state where the fruits of development are shared by the entire nation and not just the elite.
PTI issued a wakeup call to the nation today, in a hard hitting presentation the Economic Policy team exposed the worst ever performance of government”s in Pakistan’s history. PTI castigated the federal and provincial governments for misplaced priorities, incompetence and greed. No effort has been made in the last five years to address the basic problems facing the citizens today including highest ever sustained inflation, no jobs, a crippling energy crisis and deteriorating law & order. The failure of the state to look after its citizens comes at a very high price, with key human development and welfare indicators for Pakistan being worse then some of the poorest Sub-Saharan African states and lagging behind other countries in south asia.
PTI pledged to focus all energy towards improving livelihoods for the citizens and creating jobs for the youth through a radical reforms program. A Five pillar emergency reforms program has been drafted by PTI in consultation with key stakeholders including top businessmen, academics, technical specialists, labor unions, farmer associations and the youth of Pakistan. Despite the momentous challenges ahead, PTI’s reforms program will not only rescue the crumbling state but also meet the aspirations of our citizens, in particular the youth, for a sovereign welfare state.
1. Worst ever performance in Pakistan’s history
The last five years have been an unmitigated disaster for the people of Pakistan with the status quo parties (PPP/ PMLN/ allies) setting new records of bad governance and incompetence. Average growth of 3% in the last 5 years is the lowest period of growth in Pakistan’s history. In the same period India, Bangladesh and Sri Lanka posted growth rates more then double that of Pakistan
Investment to GDP ratio has collapsed to 12.5% in FY12 compared to 22.5% in FY07. This compares unfavorably with investment to GDP ratio of 35%, 28% and 25% for India, Sir Lanka and Bangladesh respectively. This means that there will be no jobs available for millions of youth entering the workforce in the next few years.
On the other hand 5 consecutive years of double digit inflation for the first time in Pakistan’s history have made the lives of tens of millions of Pakistani”s a living hell
Why the status quo must be defeated
If the status quo policies and performance are allowed to continue for another 5 years the debt burden on each citizen will double, the energy crises will grow much worse with both electricity and gas shortages becoming much worse, inflation will continue unabated and millions more will be added to the unemployed rolls.
2. Emergency Reforms Program
PTI has developed a 5 pillar Emergency Reforms Program to address the critical challenges facing Pakistan today and break free from the vicious cycle of low growth, high inflation and rising poverty. This program aims at deep institutional reform and takes on the powerful entrenched vested interests head on to break the status quo. The highlights of the program include :
· Energy reforms – focused on reducing cost of producing electricity from indigenous resources. This will resolve the circular debt and make Pakistan an energy secure state. The details have already been announced thru the energy plan announced earlier
· Expenditure reforms – Shutdown PM, CM and Governor House’s. Slash budget for the Presidency by 50%. Reduce ministries to 17 from 37. Abolish free and subsidized plots. All state departments including Military to reduce spending and release funds for the welfare of the citizens
· Tax reforms – Tax all incomes regardless of source and create a just and equitable tax system; impose a minimum asset tax adjustable against income already paid. End ‘soft’ amnesty schemes. Provincial governments must take responsibility, collect property and agriculture tax from the large landholders. Revamp FBR and make it autonomous insulated from political pressures. Reforms will increase tax revenue to 15% of GDP in 2018 from 9.9% in 2012.
· Institutional reforms –Carry out deep reforms that make state institutions empowered, accountable and transparent. Devolve power from the central and provincial capitals and empower local communities at the grass roots level
· Accountability institution to be outside the purview of the govt to enable across the board accountability with no political interference. Special Task Force to recover looted national wealth stashed outside the country. All recovered assets of corruption will be used for educating the youth of pakistan.
· Education & Health reforms – One modern Education system for all Pakistanis. Increase education spending five folds to PKR 2,195bn by 2018 to achieve 80% enrollment. empower communities to manage schools.
Similarly, we will introduce a free health care system for the poor. Spending on health will increase 5 folds to PKR 1,142bn by 2018.
The PTI economic policy envisages an indigenous investment and trade driven growth strategy for sustaining a welfare state. PTI targets to ramp up investment spending to 21.4% of GDP by 2018 after collapsing to 12.4% under PPP/ PMLN/ allies. Investment will be ramped up by resolving the energy crisis and increasing credit access to private sector credit by reducing crowding out by large government borrowings, and bringing down the interest rates. PTI will place special emphasis on inviting overseas Pakistani’s to invest in Pakistan. To facilitate the massive infrastructure investments which will be required a specialized Infrastructure financing institution will be set up. PTI will also target to make Pakistan a leading center of Islamic Finance. PTI will also encourage large sovereign wealth funds in China and Middle East to invest in Pakistan with particular focus on developing the large indigenous reserves of coal, copper and gas.
Agriculture remains the backbone of the economy, PTI targets to sustain high growth rates by increasing agriculture yields and improving efficiency of on-farm use of water and energy. Improved storage facilities and infrastructure can reduce post harvest losses. Focus will remain on small farmers, ensuring access to inputs and credit needs and strengthening market linkages to ensure fair price to the small farmers. Higher agriculture productivity is critical for bringing down inflation.
Rapid industrial growth is critical to creating jobs for the 2 million youth that enter the workforce every year. PTI targets to sustain industry growth at 9% in the next five years by resolving the energy crisis and providing modern rail, road and ports infrastructure. PTI industrial policy will focus on SMEs .Industrial activity will be encouraged in each district based on local endowments to create local employment. Special focus will be placed on the existing industrial clusters to improve their global competitiveness. The aim would be to help these industries move up the value chain and become export based engines of growth. PTI strategy revolves around diversifying the industrial base and diversifying export markets. The PTI policy recognizes the vital role of trade in building a modern economy and the special role that intra regional trade plays in this regard. All steps will be taken to take full advantage of Pakistan’s great location next to the most vibrant economies of the world .
PTI Economic Policy Presentation
PTI Economic Policy