Daily Times

In Pakistan, wide circles of public opinion think that security and foreign policy matters are being decided by the military establishment. However, the contrary view is that the civil and military leaderships are on the same page in this regard. Even in mature democracies, political leaderships take decisions on the basis of the information provided by intelligence agencies and on the advice of the military leadership. President Barack Obama took the decision for the surge in Afghanistan on the advice of his commanders. Even the decision for an extension of the military presence there has been taken on the advice of the military. It is a matter of record that the Indian military prevailed upon the then Indian Prime Minister (PM) Manmohan Singh that India would lose strategic advantage if it withdrew from Siachen. The redeeming feature is that PM Nawaz Sharif has understood the mood of Narendra Modi and has reviewed the India policy.

Our PM should now focus on the economy, which is still in dire straits. Pakistan is facing many economic challenges vis-à-vis the perennial fiscal deficit, trade deficit and current account deficit. As a result, it has accumulated debt of about 66 percent of the GDP, which includes $ 65 billion in foreign debt and $ 122 billion in domestic debt. In the fiscal year 2014-2015, Pakistan’s imports were approximately $ 42 billion and exports $ 23 billion. Hence, there was a trade deficit of $ 19 billion. Despite remittances from Pakistani expatriates to the tune of $ 16 billion, there was a current account deficit of $ 2.2 billion, which has to be financed from foreign loans. Though the fiscal deficit has somewhat declined, it is five percent of GDP. If this trend continues, Pakistan will find itself in a vicious circle and rising debt will require further increase in debt servicing, and, as a consequence. increase in the fiscal deficit.

Secondly, Pakistan would be constrained to abandon development projects and would find difficulty in allocating adequate resources for defence and social sectors like education and health. Thirdly, the US and the west might force Pakistan to limit its nuclear and missile programmes. However, the present government made it clear before the PM left for the US that it would not buckle under pressure. PM Nawaz Sharif also seems to have realised that perceptions of corruption in some ministries are fraught and could tarnish his image. Recently, he had to intervene in the confrontation among his senior cabinet members, asking the Minister for Planning and Development, Ahsan Iqbal, to continue performing his job. Ahsan Iqbal had called on PM Nawaz Sharif in the wake of his growing differences with Water and Power Minister Khawaja Asif, and Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi.

Both key ministers had accused the planning commission of working against national interests by delaying approval of the projects of their ministries. They went to the extent of demanding that the planning commission be disbanded. But Ahsan Iqbal has the blessings of the PM, who asked him to continue with his good performance. Nawaz Sharif should show zero tolerance towards corruption, nepotism and lackadaisicalness on the part of his ministers and bureaucracy, as he has many a time complained that he could not deliver because he was not allowed to complete his terms in office. This time round he has to take measures and steps to deliver to the people if he wants to be remembered in history as a visionary leader and one who has honoured his commitments to the people.

The PM should reverse the objectives of his economic policy. Since the inception of Pakistan, our planners had the flawed perception that if a lot of wealth was generated at the top, the masses would automatically benefit from the ‘trickle-down’ effect. However, evidence suggests that the best of economic plans cannot succeed so long as human beings are treated as mere statistical numbers. Therefore, top priority should be given to ameliorate the lot of the people, as democracy is all about the people. Among other factors, the most serious aspect of our dire economic situation is growing public debt, which on the one hand limits the capacity to build a strong defence and on the other limits fiscal space to invest in human development and infrastructure. The threats faced by Pakistan have to be understood in the light of the fast changing regional and international situation, which adds urgency to reviving the economy so that adequate resources can be allocated to counter them.

Barring a few honourable exceptions, almost all governments in the past took loans from the International Monetary Fund (IMF) and other international financial institutions. Every government said it was taking loans in order to pay back loans taken by the previous government. In this backdrop, the loans taken by the PML-N government under the current Extended Fund Facility (EFF) arrangement will have to be repaid by subsequent governments. Apart from that there are always strings and conditions attached to IMF loans such as reducing the budget deficit, increasing the capacity to generate revenue by further effecting increases in the prices of electricity and other utilities to balance the budget. It has to be mentioned that the IMF is driven by many factors, including the dictates of its larger shareholders — the big powers — to promote their own security and economic goals, and its own financial interests.

In the process, instead of being helpful in restoring the longer term viability of the economy, the IMF has been responsible for enabling successive governments to survive on borrowing and postponing difficult economic policy reforms, including measures for controlling corruption, stopping the loot and plunder of national resources, and making appointments in public sector organisations and institutions on merit. Such IMF reports mention the problems but give superficial assessments of the economy and the institutions. However, no suggestions are given for improvement. For example, in one of the recent reports, the IMF’s statement is silent on the stagnation in exports, widening of the current account deficit, slowing down of growth in credit to the private sector because a large portion is used by the government, expansion of the informal or underground economy and increase in income inequality and corruption.

The writer is a freelance columnist. He can be reached at mjamil1938@hotmail.com