Daily Times

The Muddling 90s as rightly titled by Dr Ishrat Hussain dragged Pakistan through four interim- appointments, four elected and a military coup that would change the country. The era is a stark reminder of the ongoing economic turbulence. Even though the economic challenges were no less different or difficult than in the muddling 90s compared to today, political instability and poor governance remain common denominators. However, what followed or the period after October 1999 marked a new economic dawn. Perhaps one can confidently say it was the cost of the neo-economic mavericks of the 90s that pulled an impossible economic stunt and put Pakistan on the road to recovery or reformation. Though there is no way of turning the wheel back to the reformation period, there is a way to help put the current situation on the path to recovery.

Firstly, if we can avoid making or repeating the unacknowledged mistake that has badly dented the country’s economic and financial cycle. The overconfidence given to cartels ultimately led to the slow demise of Pakistan’s backbone. The 90s were a perfect opportunity to end the leakages in the country’s export system. As an economist, I can see the brighter side of cartelization. However, for Pakistan, it only has had a negative impact, which is where my main criticism of today’s neo-economist stems from. Pakistan today most desperately requires a solid 2-pronged strategy.

Dar-o-nomics or not, the truth is that our economists have failed miserably at coming to terms with a long-term economic solution for the country.

The first phase of the strategy is to increase the export base of the country and put an end to the existing austerity culture. This may not be music to many but will require a complete shock to the export base to revive it, especially in the current scenario. But our inability to never strengthen the country’s export base needs to be ended. Looking at the case of Iran, the country has survived in the face of all challenges and sanctions but kept its economy afloat. Pakistan’s sports exports, surgical industry, IT sector especially IT Services, fruits and vegetables, meat and poultry and more are known to have great potential. The regional potential is a completely unchartered territory that is yet to be taken seriously. A case in point is Vietnam’s $479 million in surgical equipment imports which can become a great export potential for Pakistan. A targeted export strategy that is aligned with regional export demand is perhaps the only viable solution. The economists and the so-called political mavericks have to find a way to work together. Unfortunately, we continue to witness failures at both ends. Certain lessons can be learnt from the military regime of 1999. Boosted by liberalization, de-regularization and privatization, macro-economic stability and structural reforms for self-sustainable growth need to be tweaked and implemented.

Austerity drives on the other hand can be ‘self-defeating’ with spending cuts causing a fall in aggregate demand, leading to lower economic growth which in turn leads to lower tax revenue and can offset the improvement from spending cuts. Most of all leading towards liquidity traps, austerity drives for countries like Pakistan can mostly have devastating economic impacts. Unfortunately, our politicians and economists have in the past greatly relied upon austerity as an emergency economic measure. However, in the long term, the effects have been anything but positive for the economy. The poor understanding and continuous hopping from one strategy to another have resulted only in economic chaos. Dar-o-nomics or not, the truth is that our economists have failed miserably at coming to terms with a long-term economic solution for the country.

Also, our so-called politicians or mavericks in their minds; have created a political circus not only in the national circle but also in the international arena. The fact that IMF conditionalities continue to pile up and the reviews continue to get dragged in the mud further impacts the deteriorating foreign reserves. Instead, we continue to hear the same old political slogans in response to all of the economic challenges. A very sad reality is the disloyalty we have recently seen in recent times is in the shape of politicians continuing to spew hatred and controversy against their parties has brought out a really ugly face of politics in Pakistan’s Political culture. Are they all hiding behind their political incompetencies, I think so.

Most of all, what our political mavericks and neo-economists have utterly failed to achieve is the development of a comprehensive social contract, devising a national security policy that combines the economic, regional and political needs of the country and gathers masses under the umbrella to revive Pakistan.

The writer is the Foreign Secretary-General for BRI College, China. He tweets @DrHasnain_javed