Despite numerous shortcomings and failures of the coalition government, which Shahbaz Sharif headed for a brief period of one and a half years, there was widespread belief at the Pak Secretariat that following the general elections, the gentleman would resume his position as Prime Minister, with Ahsan Iqbal returning as Planning Minister.
Despite significant delays, the general elections proceeded, and the government formation process concluded. Normalcy returned to the Pak Secretariat, with Shahbaz Sharif assuming the role of Prime Minister and Ahsan Iqbal becoming a member of his cabinet. The sequence of events leading to this outcome is now evident, as history has made its decision.
The government’s lack of direction is a pressing issue. Despite the passage of many months, there has been no clear policy aimed at fostering inclusive growth to address the wounds inflicted by inflation and unemployment on the populace. The focus remains fixated on achieving fiscal stability. More loans are deemed necessary from the IMF, with stringent conditions to be met to boost revenues, curb fiscal losses, and rectify imbalances in tax collection. The Finance Minister grapples with these challenges, yet the crux of the problem lies with the political government. Unauthorized taxes on electricity, gas, and petroleum products exacerbate inflation, but a coherent policy to tackle this issue is conspicuously absent.
The correlation between fostering new industries and businesses and ensuring affordable energy is indisputable.
The correlation between fostering new industries and businesses and ensuring affordable energy is indisputable. Yet, additional measures are imperative, especially concerning interest rates. The government’s reliance on bank borrowing and the business community’s passive stance underscore the urgency of addressing this issue. Furthermore, regional trade potential remains largely untapped, while avenues for accessing cost-effective goods, raw materials, and capital transfers are constrained.
Although efforts to dismantle monopolies, deter hoarding, and enhance public accountability could mitigate inflation, the prevailing stagnation suggests unchanged policies. The government appears either perplexed or too immobilized to enact substantive measures.
During Shahbaz Sharif’s last brief tenure, Ahsan Iqbal introduced a growth framework in the Ministry of Planning, based on Vision 2025. This framework, developed in just three months, was widely accepted as a solution to Pakistan’s economic challenges, rooted in its long-standing reliance on an import-led growth model. This model, which has been in place for decades, has encouraged consumerism instead of fostering self-reliance. Specific sectors were targeted to maintain trade balance, with particular emphasis on promoting the textile industry.
However, the flaws of the import-led growth model became increasingly evident over time. Relying heavily on imports for economic development made the country vulnerable to external shocks, such as fluctuations in global commodity prices and changes in international trade policies. Moreover, it led to a drain on foreign exchange reserves and exacerbated trade deficits.
Furthermore, the import-led growth model neglected the development of domestic industries and manufacturing capabilities. This resulted in a lack of job creation and economic diversification, perpetuating dependence on foreign goods and technologies.
Additionally, the reliance on imports led to a neglect of agriculture and other primary sectors, which are crucial for ensuring food security and sustainable economic development. This neglect can further deepen inequalities within society, as rural communities are often marginalized in favor of urban industrial development.
Our industries have suffered severe damage. Our agriculture has failed leaving us dependent even on essential items like pulses and edible oil, which we now must import. Attempts to improve the trade balance by devaluing the rupee have only exacerbated the situation, making these essential items increasingly unaffordable for the public. As the government resorts to borrowing from the IMF, calls for more revenues arise, placing the burden squarely on the shoulders of the unemployed and impoverished masses.
The government’s handling of the economy appears directionless. While officials speak of boosting investment, their statements often ring hollow as the necessary conditions for investors are not being created. Even the Planning Commission, which once painted a rosy picture of stability and comprehensive development, now seems powerless in the face of current challenges. The vision they once presented is nowhere to be seen amidst the prevailing circumstances.
Currently, the Planning Commission is confronted with a significant challenge: finding a solution that appeases both the IMF and China simultaneously. This delicate task cannot be accomplished solely through hefty salaries or social media teams. Recently, the ministry advertised for the recruitment of public relations and editorial personnel with the ability to craft narratives. However, the issue lies not only in the narratives themselves but the implementation of polices, which remains beyond its control.
While encouraging foreign investment is imperative, there are inadequate measures in place to safeguard these investments. Capital is being withdrawn from projects related to the China-Pakistan Economic Corridor (CPEC), and local investors are discontented with high-interest rate policies. Industries are shuttered due to exorbitant energy costs, further diminishing the purchasing power of the populace. The government is even struggling to meet its obligations to pay salaries and pensions to employees.
It’s worth noting that the target of revenue collection is not the affluent but rather the vulnerable and disadvantaged masses. National unity has been destroyed amidst contested elections. Local governments, which could have served as a means for equitable resource distribution, are either incapacitated or delayed. Essentially, concrete government actions to stimulate growth will naturally foster a narrative. The Planning Commission holds significant potential to contribute to this endeavour.
The writer is an Islamabad-based veteran journalist and an independent researcher. He can be reached on Twitter @riazmissen