Govt’s fiscal recovery hype

In times like these, when souls in a Pakistani cabinet are heavily mortgaged to jobbery and skin saving — matters of the economy often take a backseat

Govt’s fiscal recovery hype


In all my born days never have I come across a political leader so insanely stubborn. And, so reluctantly honest to the nation; holding his own, even when the writing is vividly clear on the wall. Nawaz Sharif and all his cohorts have gone through a rough patch of late. The JIT verdict has been a career threat, sending the whole Sharif khandaanin to an orbit. Watching N-leaguers and their pointless tittle tattle on late night political shows is even more bizarre and only suggests just how oblivious they are to the public mood.  Their best bet now is to hide behind the cloak of economic recovery. And, as I know a bit of my onions too, I don’t subscribe to the canards that Pakistan’s economy is in the lap of luxury. I say this for two key reasons.

First, IMF’s short term growth projections of over 5 percent present an incomplete picture. GDP may be a decent indicator but to quibble about it ceaselessly is not sensible, as in a low income country like Pakistan, it is exceedingly important to examine, whether or not, the growth binge translates into long term sustainable development. Regionally, Pakistan today, continues to struggle with a relatively low savings rate. In 1960, Pakistan’s saving rate was a meagre 5 percent of its GDP. In the same year, India and China stood at 14 percent and 23 percent respectively.  This figure jumped just a tad bit to 6 percent by the end of 1970s, against India’s much improved 20 percent and China’s 30 percent. By the middle of 90s, the savings rate had become slightly more expressive (14 percent), jumping into a double digit territory. But India and China, often phrased together as Chindia, by then, had become the enduring growth drivers of Asia, both having savings rate of well above 25 percent. As a result, Pakistan’s economy since long has failed to fire at its full pelt, battered and constrained by painfully higher levels of debt burden.

The Sharif brothers have always led the nation up the garden path, by stating artificially bloated GDP rates, erringly or otherwise skipping their two cents on the country’s sorely weak external debt position and fiscal mismanagement

Sharif brothers have always led the nation up the garden path, by stating artificially bloated GDP rates, erringly or otherwise skipping their two cents on the country’s sorely weak external debt position and fiscal mismanagement. When they last ruled the roost in the late 90s; they left the economy gasping for air, with a huge pile of debt burden, that, as per reliable estimates exceeded USD 30 billion: close to half of the country’s GDP. More than third of the export earnings back then were utilized in debt servicing. In a country that is recurrently reeling under a weak currency and tainted with a balance of payments crisis, it was no less than a disaster. Sadly, as per a recent report by the Moody’s Investors Service, Pakistan is once again on the ropes, with an external debt burden of close to USD 80 billion, which is around 27 percent of the country’s GDP. Cutting my GDP cackle short, all this growth talk would have been impressive had it made the economy self-sufficient and enduringly sustainable.

Second, this growth chatter that is often forced down our throat could possibly be poverty inducing, as nearly 60 to 70 million Pakistanis are on the breadline. That is nearly 30 percent of the country’s estimated population of 200 million. And, that’s a lot of earning potential and brain going in the shade. Millions of children are out of school, and the quality of the national health system is equally grim. Economic growth therefore is nothing but an attractive figure to quote in the press, as it is consistently failing to accentuate the problems faced by a large pack of Pakistanis.

Three turns in the centre and the economic model that the Sharif baradari has chosen for the nation has never genuinely clicked. Politically they are not having the best of times either, and may in fact knock themselves off their perch as they, quite goofily seem to have gone an extra mile in the sport of money laundering. In times like these, when souls in a Pakistani cabinet are heavily mortgaged to jobbery and skin saving; matters of the economy often take a back seat.

 

The writer is an alumnus of University of Cambridge. He can be reached at bjsadiq46@gmail.com

 

 

Published in Daily Times, July 16th , 2017.