Daily Times

Georgieva Kristalina, chief executive officer of World Bank, who visited Pakistan early this year found Nawaz Sharif and Ishaq Dar, the both, fully aware of the country’s needs to create opportunities for its youth and contribute towards sustainable growth. The two gentlemen agreed with her that the government should speedily implement structural reforms needed to spur private investments.

Earlier, that was the last year, World Bank Group President Jim Yong Kim, while appreciating the Nawaz regime for bring back economy from brink, urged on it to create more space for the private sector, accelerate energy reforms, make improvements at the community level for health and education, and ensure that anti-poverty measures are effective at reaching poor people.

The World Bank Pakistan, which has 26 investment lending projects under implementation committing $4.99 billion other than $5.6 billion, including $1.2 billion during the 2015 fiscal year, has been urging the Sharif government to focus on quickly lifting the people out of poverty and make economic growth widely shared.

The WB has been advising the PML-N government to accelerate energy reforms, making improvements at the community level for health and education, and ensure that anti-poverty measures are effective at reaching the deserving people.

What WB officials have suggested the government is what the spirit of democracy calls for. The civilian regimes need to take care of consumers and let the businesses take care of themselves. Every development agenda is meaningless if it is not guided by the spirit to improve human indices.

While Pakistan should strive to become a ‘genuine’ democracy, political parties are meant to be its backbone. The focus of economic development has to be the uplift of the teeming millions, who have been left out and marginalized as the country has gone through the process of structural reforms undertaken by the Musharraf regime.

Just have a look at the falling human indices and growing incidents of extreme poverty whereby newly-borne babies and mothers are falling victim to malnutrition but the government having no option other than increasing the number of hospitals and enhancing supply of medicines. Thar in lower Sindh is the case in point.

The other issue worth mentioning is the heavy industry contributing to GDP with higher ratio by every passing year but not fulfilling environmental obligations and showing least respect for labour laws.

The Musharraf-led regime had relied heavily on the international financial institutions (IFIs) to carry out structural reforms. While the fiscal deficit was taken care of, the economic managers undertook the course of economic liberalization, whereby the private sector had to take a leading role. Alternatively, the government disposed off many public-run entities and its success yielded results vis-à-vis energy, telecom and banking sector which, understandably, attracted huge foreign direct investment. Civilian regimes have unfortunately left the job of privatisation half-done.

Pakistan annually pumps $ 5 billion into the loss earning public enterprises. The burden is definitely shifted to taxpayers. The process of privatisation remained virtually stopped during the PPP’s tenure. The PML-N, when it came into power, undertook to revive the process and complete it in three years against the $ 6.6 billion loan from the IMF but only the heavens know when this promise would be fulfilled. Ishaq Dar has marked the deadline but circumstantial evidences suggest that he will fail on this account. It is why he is not actively pursuing the IMF for any new program for Pakistan.

In the post-structural reforms scenario, the government is not meant to run businesses but to hand over the job to the private sector. Keeping in mind the ‘rule of the game’ that the job of the government is not to do business but to regulate it to the advantage of the consumers, implementing environmental regulations and labour laws is the responsibility which the civilian regimes can’t evade.

The government has to facilitate consumers with the availability of cheap and quality goods; quality controls and regional trade is the key to this end other than bringing down the cost of doing business.

Since 2008, there has been a tendency to respond the pressure of the IFIs to cut down public expenditure by removing subsidies and enhancing revenues through taxes on goods with non-elastic demand. There should have been introduced austerity measures to cut down the public expenditure and increased funding for social sector development but look at the number of ministries and the budgetary allocations for presidency and the PM House and it becomes quite clear how their policies are not people-centred.

That the GST stands as higher as 17 percent and the government is generating one third of revenues from energy sector. Just imagine how this measure has proven lethal for economy and, actually, contributing to its downturn. On the other hand, tax-to-GDP ratio is merely 10 percent, and 60% burden falls on the shoulders of lower and middle income groups. Economic policies of civilian regimes are enough to put democracy and economy, the both, into peril.

In a recent move regulators have been ‘taken’ over by the relevant ministries under the pretext that this step is must for successful implementation of CPEC project. Certainly, the government sent a wrong signal to investors, at home and abroad, through rendering ineffective an important pillar of economic liberalisation.

Undertaking structural reforms to the point where the same benefits the commoners as well is what IFIs like World Bank mean when they emphasize on sharing growth with the poor and marginalised sections of the society.

The alternative course certainly passes through privatisation, spending more on social sector development (health and education) and most importantly widening the tax net through registering the unregistered businesses.

Why the civilian regimes have restricted the benefits of economic reforms to the privileged sections of the society? It is not that difficult puzzle to resolve, given the fact that local government elections have been delayed for six long years and when held under the pressure of Supreme Court, the bodies have been rendered crippled and toothless undermining their potential to make economic development process ‘inclusive’ as well as ‘sustainable’.

The writer is an Islamabad-based veteran journalist and an independent researcher. He can be reached on Twitter @riazmissen