Musharraf's Minister will draft Imran's Fiscal Policies; Special care for Trickle Down Effect is needed

Former Dictator General Pervaiz Musharraf's Minister of Industries, Prodution and Special Initiatives, Jahangir Khan Tareen has been tasked to draft Economic Policies, Labor Policies and Tax Reforms on behalf of Pakistan Tehreek-e-Insaf.

One wonders, how a Staunch Supporter of Former Prime Minister Shaukat Aziz's Policies can bring "Change" in country's fortunes? As the Nation is still waiting for the over due "Trickle Down Effect" of Economic Benefits, promised in Tareen's previous term as Minister.

In Tareen's previous stint as Minister, State Bank’s Interventionist Operations in the Currency Market was that it made imports more expensive in Rupee terms, fuelling inflation and driving up the prices of many types of goods, including capital goods. Higher-priced capital goods, in turn, increased the cost of expanding manufacturing plants or setting up new factories, resulting in a slowing down of the Industrialization Process.

Like all bubbles, the Low-Interest-Rate Bubble, too, had to burst one day. Within a few years, loan interest rates again began to rise steeply, soaring from a low of about five per cent per annum in 2002-2003 to over fifteen (15) per cent today for business loans and twenty-two (22) per cent for consumer finance loans.

Among other things, this rise in interest rates led to a decline in loan-financed car and motor cycle sales, with the number of vehicles sold by local assembly plants falling by as much as fourty (40) per cent in some cases in fiscal 2007-2008.

Looking at the overall state of Pakistan’s Economy today (including its increasingly high inflation rate, its burgeoning trade deficit fueled by the high price of oil imports, its stagnant levels of exports, its low industrial productivity, its growing per-capita water shortages, and its chronic electricity shortages), one needs to remember that these and other economic problems were mostly because of Tareen's Government’s making.

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