By Khaleeq Kiani
LIKE many other
annual rituals in the budget season, a controversy over growth numbers and its
methodology has become a routine. Likewise, the terminologies like reforms
have been misinterpreted to change names instead of work and institutional
culture.
Every year after
priorities committee meetings, the federal government usually convenes a
session of the National Accounts Committee (NAC) to firm up output estimates of
almost all sectors of the economy on the basis of about 8-9 months of
performance and estimates of the remaining period of the fiscal year. This is
followed up with projection of annualised growth rate of the GDP, its size and
so on.
And every year
after the NAC meeting, issues crop up over the methodology, base year, growth
rate and the output numbers of various individual sectors. It was, however, for
the first time that an NAC meeting was repeated within 12 days to revise growth
numbers and change the base year to determine the size of the economy.
The government
had set a target of 4.2 per cent economic growth rate at the time of budget
announcement in June last year.
After heavy
rains in Sindh, the growth estimate was revised downwards to 3.6 per cent in
September. However, it emerged that crop output had been more than compensated
in Punjab for the losses in Sindh, and the growth estimate was once again
jacked up to four per cent and widely articulated by finance minister Dr Abdul
Hafeez Shaikh at home and abroad.
And right when
he was talking about four per cent expected GDP growth rate in Washington with
international lending agencies, the NAC on April 26 worked out a growth
estimate of 3.2 per cent on the basis of change in the base year which was
graduated to 2005-06 from 1999-2000. At that time, it had estimated wheat
output at 23 million tons.
A follow up
meeting of the NAC was called within 12 days of its previous meeting that
changed the base year back to 1999-2000 and economic growth rate was worked out
at 3.67 per cent — a bit closer to the finance minister’s off-hand estimate of
four per cent. In the process and time, the wheat output estimate also
increased to 25 million tons. That is an annual feature given the fact that
wheat production data is finalised almost at the end of May every year. By the
time, the growth rate may be again raised to four per cent.
So a $300
million reforms programme with lenders’ support has not changed anything on the
statistics front. The concerns did not change this year, rather exasperated the
suspicions further.
The government
had decided a decade ago to transform the Federal Bureau of Statistics into an
autonomous institution to collect economic data independently without
interference of the ministry of finance or the federal government.
The decision was
taken in the background of general complaints that data about economy’s size,
its growth rate, inflation, poverty, performance of various sectors,
demographics and so on were not reliable enough to enable policymakers,
independent economists, educational institutions and international research
bodies to foresee, analyze and plan policies, make opinions and recommend new
models.
It may be
recalled that in one of the final years of Prime Minister Shaukat Aziz, a
military secretary to the PM was reported to have made a friendly intervention
to get him and his agriculture minister Abdul Sattar Lalika to agree to a
consensus wheat output estimate as the PM wanted to show higher growth rate and
Mr Lalika feared a news about a bumper crop would crash the wheat prices to the
disadvantage of his farmers’ community.
That was
followed by the controversy over the incidence of poverty that became such a
political issue that no government has announced poverty numbers in six years;
related surveys have been stopped for the last many years; the data of
household and income survey completed more than two years ago have not been
released so far.
Despite
preparation of a draft law in 2005, successive finance ministers and
governments delayed its promulgation. Finally, the law changed the name of the
organisation but did not enable it to achieve autonomy and independence for
which the reform was introduced through technical and financial assistance of
the World Bank and German development body (GIZ).
Whatever may be
the name or abbreviation — FPS or PBS — the question however remains: how can
an institution become independent or autonomous which is led by a federal
bureaucrat? In spite of his claim of having all the powers to change the base
year and present growth estimates, the GDP estimate has been revised under
government pressure.
Under a $500
million World Bank programme, the name of Central Board of Revenue was changed
to Federal Board of Revenue. The mere change of nomenclature of CBR into FBR without
any culture change did not bring any gain. The tax-to-GDP ratio, that stood at
10.3 per cent before the World Bank loan programme, has dropped to 8.2 per cent
now.
Similarly, Wapda
was divided and its power sector responsibility was transferred to its power
wing — renamed as the Pakistan Electric Power Company — after a delay of two
years in 1997. Its last rites are yet to be performed after 15 years.
A new entity
called the National Transmission and Despatch Company (NTDC) was created to
take over the responsibilities of PEPCO, primarily relating to power purchase
from all sources and sale to distribution companies for onwards supply to
consumers. In the middle of its transformation, another central company —
Central Power Purchasing Agency — was created to purchase electricity from all
sources, price it and sell to distribution companies.
Thus numerous
companies have been created. On paper, the entire chain of Wapda, PEPCO, NTDC,
CPPA, and now a transition team, are working and wasting nation’s resources.
These are in addition to 14 distribution and three generation companies and a
transmission firm in the public sector, and over two dozen private power
producers.
The main
objective for which the power sector reforms were taken in hand has since not only
been forgotten but difficulties compounded. When Wapda restructuring started in
1997-8,its losses varied between Rs5-8 billion a year and have since increased
to over Rs400 billion a year, and is still rising. The loadshedding that did
not then go beyond two hours has now crossed 12 hours on a country-wide basis.
In a similar
exercise, the Agricultural Development Bank of Pakistan has been re-named Zarai
Taraqiati Bank. Its losses have gone up and disbursements have been virtually
at a standstill for many years.
The reforms at
Corporate Law Authority has created the Securities and Exchange Commission of
Pakistan that, instead of deepening the market base by attracting investments
of the general public, has facilitated repeated market crashes and whitening
schemes.
No comments:
Post a Comment