For the past few weeks, the new government seems to be struggling to figure out its priorities. Presently, the situation seems chaotic, though this is somewhat understandable. Pakistan’s accumulation of problems is such that few believe any government could bring the house in order any time soon. The problems range from extremism to corruption, to a general lack of government services to falling exports to unemployment in the face of a growing population. However, since the ouster of Nawaz Sharif as Prime Minister (PM), a Pakistan Tehreek-e-Insaf’s (PTI) election victory was anticipated. The public expected that Imran Khan’s party had braced itself before hand to confront the most important national issues, and therefore from the outset, it would have clarity about its priorities — and at the very least — a tentative plan. The public also expected that with a populist agenda and promises of change, PTI would start on an optimistic note, signalling a new era of economic prosperity and pro-business policies. However, what has transpired so far is a clichéd mantra of problems left behind by the previous government, with apparently no viable plan to fix them, and a pessimism that has puzzled the markets.
Much of the government’s energies in the initial weeks have gone into public posturing on two issues-current account deficit and construction of the Diamer-Bhasha Dam-in both of which the ‘out of box’ solutions being expounded are based on overzealous austerity, selling government properties and urging the general public to contribute their savings to raise billions of dollars. Analysts have widely expressed their shock at the latter two approaches, given the enormity of the funds needed. Additionally, the dam proposal is being hotly contested on technical grounds raising questions about its risks of project failure. The government has also announced austerity and civil service reform committees which are bloated and headed by the same person — Dr Ishrat Hussain.
The situation demanded that the top PTI leadership ride on the euphoria of its historic electoral victory, and rather than personally confronting the opposition parties in the maiden session of the new lower house, it reset its relationship with them to mitigate the bitterness of the past, while also sending a much awaited message to the nation, telling them family income and living standards were going to rise. That opportunity was lost.
Adding to this worrisome scenario is a persistent public disinformation campaign apparently organised by the PTI social media wing, making premature claims about the stature of PTI’s Chairman. These include illogical comparisons of economic performance of the past government, with PTI’s intended projects, based on incorrect and misrepresented data, as well as slander against opposition leaders from other parties. They didn’t even spare the sombre occasion of a former first lady’s death. In an economy that has been struggling to grow for over a decade, rather than breathing fresh air into the prevailing gloom by taking steps to stimulate the economy, the PTI government is unwittingly risking slowing it down through persistent pessimism, additional taxes, and slashing of development funds.
In an economy that has been struggling to grow for over a decade, rather than breathing fresh air into the prevailing gloom by taking steps to stimulate the economy, the PTI government is unwittingly risking slowing it down through persistent pessimism, additional taxes, and slashing of development funds
As such, it is becoming clear that we are not on the trajectory to the promised Naya Pakistan. The general sense is that in attempting to solve economic problems, the government is losing sight of a very important fact: Pakistan’s is an open market economy.
Every economic endeavour should be based on the fact that the open market economy is Pakistan’s biggest strength. This strength offers promising market-based solutions, based on value creation through public and private investments leading to higher public revenue and exports, rather than attempting to retire the debt or construction of dams through sale of assets or eyeing hard-earned public savings which will deprive both the public and private sectors of their resources, into a risky piecemeal effort. The government should avoid raising taxes and slashing the development budget in order to spur economic activity. It should continue the previous development projects with adjustments if necessary. It should seek a combination of major debt restructuring and IFI bailouts to mitigate the current account problem in the short term, and vie for international financing for dam construction.
Secondly, the government should not ignore the opposition — which going by the combined number of seats –represents about half the population of the country. The government needs to forge a working relationship with it in order to address high stake challenges in the long term and also to tap the invaluable experience of the seasoned politicians in those parties. This reconciliation will be helped by fostering a culture of tolerance within the PTI. Indeed, the senior PTI leadership should immediately address the integrity problems of its propagation highlighted above or else it will inflict irreparable damage to the very authenticity of the party.
Apart from taking the immediately needed corrective measures to improve macroeconomic indicators and bureaucratic efficiency, and upgrade healthcare, education, justice, water and power, and accountability departments, the government needs to prioritise the rest. It would be best to prepare a constitutionally protected long term development plan, say for the next 25 years, in consultation with all political parties and other stakeholders with provisions for course adjustments on the way. Going by the best governance practices in the face of scant resources, this plan should focus on just a few special thematic areas for each five year term of democratic rule.
In my view, this term-based thematic focus should accord a high priority to interventions designed as projects in crucial areas which would take a long time to deliver results and yet comprise the most immediate challenges to achieve economic development. In my opinion, the focus of the government for the current five year term should be on the development of the youth (aged below 30), which accounts for over 60 percent of Pakistan’s current population and on the encouragement of Small and Medium Enterprises (SME’s) which employ over 90 percent of the non-agriculture labour force. These two domains –which are interconnected through a demand and supply relationship, as will be shown in the next part of this article — are currently most important for Pakistan’s development and stability, and as such merit the highest government priority at this time.
The writer is a graduate of MIT and an experienced entrepreneur with previous service in public sector, based in Islamabad. The above is first of a series of related articles. He can be contacted at [email protected]
Published in Daily Times, September 15th 2018.