Daily The Business

Eight months chaotic, economy

MUHAMMAD JAVAID

After eight months during which the Pakistan Tehreek-i-Insaf (PTI) government fuelled uncertainty, massive cabinet reshuffle was unprecedented, but understandable. Uncertainty and confusion is what ruled during these eight months and an inexperienced government operational with superlative manifesto, it was expected. Investors prefer a flourishing economy and dislike uncertainty and confusion. They need to know what the future holds for them, no matter how worse, so that they can plan accordingly. No doubt it is very difficult to take bold tough decisions to stabilize the economy and its growth for an elected government which doesn’t have a clear majority in Parliament and when hypes are also created for reliefs. PTI is a victim of its own big promises made during election campaign. People were expecting miracles but found the actual performance below average. The government needs to articulate for the public precisely what is needed, present a plan and sequence of actions, and inform about misdirection of the past.
The PTI committed the greater sin of failing to explain to the public the harm that PPP and PML-N’s policies caused. PTI government inherited an economy facing an imminent downturn. This had been predicted much before the elections but PTI’s economic reform-oriented team couldn’t foresee and grasp the seriousness of the issues until they came to power. In fact PTI was neither aware of inherited economic situation nor having any economic revival plan even couldn’t provide any economic vision nor plan during first 100 days. It was expected to select own economic and implementation teams, assess the economic situation, come up with a clear plan and then stick to it, but PTI couldn’t do and opted to work as a monotonous. The main challenge was to stabilize the economy and bring certainty to the market. The PTI failed there, and every passing day meant that they owned more of the problem than they should have had. Moreover government behaved like a pendulum on IMF programme and unnecessarily delayed it on the made-up pretext of softening of IMF conditions.
Although some effort made during these eight months such as agreements with Saudi Arabia, UAE, Qatar and China have given hopes that PTI will be successful to rationalise economic issues and softening IMF conditions. The Economic Advisory Council was established in which there were some good people on it initially but later on under pressure some of them removed and some others left in support of them. A few task forces were also established to bring structural changes to solve the economic issues but due to not having any legal coverage in “Rules of Business” these have become ineffective. Similarly the initiating poverty alleviation program – Ehsas, Housing Program, M-Wallet scheme to build capacity for receiving remittances instantly, Pakistan Banao Certificate and Sarmaya Pakistan are the programmes initiated during these eight months.
These programs have not left any impact due to the improper launching/management and overlook by media. At the same time the rise in prices of basic necessities further diverted the deliberation. The success of these schemes have become indeterminate due to unfamiliarity of Overseas Pakistanis with two schemes announced for them, motionlessness on poverty alleviation, anticipation results from Naya Pakistan Housing Authority based on past performance of PHA & FGEHF and many other reasons. The tax amnesty proposal is probably the last but not least reason to damage the image of PTI government as it is not only in contrast to what had been advocating in election campaign but also have become controversial before launching. The major problem with PTI is party’s think tank has no clear sense of determining priorities and direction resultantly couldn’t prepare action plan to address the issues criticized during election campaign.
The next few months are going to be critical, the new budget is to be announced. IMF team is in Pakistan and negotiating conditions. If government fails to fix the major issues, not only government even country will be in deep trouble. In this kind of difficult situation, there is a need to develop a national consensus on the economy. It is necessary to take the tough decisions but in a confrontational atmosphere, will not be possible to implement that. There needs to be no politics on economic issues so government can implement tough decisions. Pakistan needs to rely on the strength of its own policies to generate more growth and jobs, and to join the groups of dynamic emerging markets. There is a need to widen the tax base and closing tax loopholes. The economy needs to become even more resilient. Debt needs to be checked and, at current levels, the interest bill is larger than Pakistan’s entire development budget. To place debt on a downward trajectory, action is needed on both revenue and expenditure. At the same time, reducing public enterprise losses can enable a scaling up of growth-enhancing investment in physical and human capital. Taken together, these reforms are important to reduce budget deficits and build sufficient buffers to protect the country against shocks that may come down the road. In parallel, there is a need to continue strengthening social safety nets to protect the most vulnerable segments of society.
This can be done by promoting private investment, strengthening export and raising productivity. These steps will pave the path to higher growth. Majority of people believe that this is a moment of opportunity for Pakistan. The inducement to continue transforming Pakistan’s economy into a dynamic, vibrant and integrated emerging market that is able to create sustainable jobs and prosperity in the country.

—The writer is ex-Chief, Planning Commission of Pakistan.

 

Muhammad Javid

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