Difficult task ahead

Mansoor Ahmad
September 10,2018

It is too early to judge the performance of the Pakistan Tehreek-e-Insaf (PTI) government, but the way it is moving about certainly shows that it is awed by the difficult task ahead as managing Pakistan is not an easy task, particularly when the hopes of the electorate are high.

Share Next Story >>>

It is too early to judge the performance of the Pakistan Tehreek-e-Insaf (PTI) government, but the way it is moving about certainly shows that it is awed by the difficult task ahead as managing Pakistan is not an easy task, particularly when the hopes of the electorate are high.

The entire set-up moves around its leader, Imran Khan. The chief ministers of the provinces where PTI is in power have to take permission of the PTI chief for all cabinet slots. At the federal level all appointments are subject to his approval. All decisions at the moment are highly centralised.

Even the most sincere and dedicated leader cannot run a country without delegating powers to the competent subordinates. The economy is not in comfortable zone. Inflation is rising, foreign exchange reserves are depleting, and rupee is under constant pressure. The exports are still not growing at expected speed while the imports are out of control.

There is no doubt that economic reforms are badly needed. The institutions are extremely weak. One expected that the first thing this government would do was to strengthen the regulatory institutions because70 percent of our problems would be solved if regulators were fair and transparent.

The PTI promised adherence to merit but its legislatures are putting pressure on the top bureaucracy on the postings and transfers even at the lowest level. The bureaucracy is as confused as the new rulers. Some bureaucrats have openly defied these pressures and some probably have conceded to the pressure.

The 100 days agenda of the government reveals that PTI is still operating in election mode. Bringing looted money can be the desire of every Pakistani, but is it is easier said than done. The foreign countries where this wealth is stashed would prolong the settlement and actual return of wealth to decades. They may have vowed to act against corruption and money laundering, but according to the World Bank, bringing back tainted money is an uphill task.

This government took some hasty decisions like increasing the power tariff when the electricity cost in Pakistan is already highest in the region. The previous Pakistan Muslim League-Nawaz (PML-N) government also increased power tariff immediately after assuming power in hopes that it would resolve the circular debt problem.

It was a wrong move because tariff was not the problem; corruption in the power sector was the actual issue. Exporting industries have since long been demanding reduction in power tariff that has booted them out of the global market, the recent increase in power tariff would further impact exports.

Imran is the only binding force in the PTI and all decisions need his final approval. You cannot run a country singlehandedly without a proper and competent team. Still he is trying very hard. He has the same traits that were present in Shahbaz Sharif who also failed to develop a competent and trustworthy team. Most of his ministers are political appointees. Some are good and some below par. The PTI chief is concentrating more powers in his hand than the former Punjab chief minister. His 100 days plan would determine the course that his government would adopt in next five years.

He is taking briefing from the bureaucrats on functioning, operations and problems of each federal ministry. The bureaucrats are very seasoned and will try to twist his mind towards what they think is best for their ministry. He has to get his plans implemented through the bureaucracy that is not rated very high. There may be honest bureaucrats but they might not be competent and there are very competent officers who have a tainted past.

PTI will deliver only if it succeeds in taming the bureaucracy and getting the best out of the mediocre lot. Imran realises this and has constituted a taskforce under Dr Ishrat Hussain.

Since there are scores of ministries, the briefings are consuming a lot of his time. It is humanly impossible to grab the substance of all these briefings, some of which might be contradictory in nature. He could have left it to each relevant minister. Probably he lacks confidence in them and some of them might not be competent as well. Power concentration in one hand slows down delivery.

No one disputes that he is an honest man who believes in merit (except his choice of ministers). People trust him in matters relating to finance. His appeal to the expat Pakistanis for contributing money for building dam would bear fruit.

Trust is his forte. The chief justice initiated Dam Fund has generated a little less than Rs2 billion in two months that is too little. Khan’s appeal is likely to net billions of dollars in a short time. If he succeeds in this venture, it would automatically resolve the immediate foreign exchange problem of the country.

One thought that Imran would not succumb to the political pressures, but he was forced to remove the best man from his economic advisory council under pressure – the decision that has been severely criticised even by his ex-wife Jemima Goldsmith – his most staunch supporter. This shows that he is as vulnerable to pressure as any other politician is.

The prime minister might resolve the immediate issue of finances through appeal to expats; still the most burning problem of the country is to increase the tax revenues. The PTI government is banking too much of public trust in Imran and ability of the bureaucracy to nab at least the tax evaders in Pakistan. Had the present bureaucracy been competent or dedicated, would the issue of informal economy not have resolved much earlier? The informal economy is benefitting the bureaucracy as well. The PTI government should seek to develop tax systems that build the state’s administrative and economic capacity. Planners should recognise that progressive taxation properly linked to expenditure, can improve legitimacy through redistribution that tackles politically destabilising inequalities.

The finance minister of PTI is inexperienced and has not acted as swiftly in improving the finances as an experienced and competent person would have done. Improving revenues in Pakistan need strong political will of the government, particularly head of finance. Ministry of Finance has up till now been the stumbling block in growth. As all funds are routed through this ministry, it stops financing at will.

The budget is prepared by the Ministry of Finance and it is duty bound to release the amounts allocated to different ministries on time. There is a dire need for coordinated efforts between the ministries dealing with trade and industry. The PTI has not announced any plan for coordination between economic ministries.

There is a moral case to be made, of course, for investing in the health and education of all people. But there is an economic one as well: to be ready to compete and thrive in a rapidly changing environment. Governments have long invested in economic growth by focusing on physical capital — roads, bridges, airports, and other infrastructure. But they have often under-invested in their people, in part because the benefits have been much slower and harder to measure. The PTI government has not outlined its detail strategy in this regard.

The new government has promised to provide 10 million new jobs in the next five years and building five million small houses during its current tenure, but has not outlined the mechanism through which these objectives would be achieved.

The writer is a staff member


More From Money Matters